2023 ended with ‘disheartening’ slip in confidence
The final quarter of 2023 saw small business confidence lose the ground made up earlier in the year, in what “should be a wake-up call” for the UK Government and decision-makers more broadly, including a case for the Bank of England to slash interest rates as soon as possible, according to a new report from the Federation of Small Businesses (FSB).
The latest UK small business index from the trade body, which represents a sector it calls “ever the economy’s canary in the coalmine”, fell back to -15 points in the final three months of last year, down from -8 in the third quarter, and on a similar level to the -14.2 registered for April to June. Furthermore, two in five such organisations said they saw revenues fall in Q4, while only one in three saw an increase,
The index, in partnership with Google, also showed a large divergence in confidence levels across major sectors, with most remaining “some way below zero”, according to the report. Hospitality “remained the gloomiest sector by far”, with the confidence reading for accommodation and food services businesses -73.0 points, down from -31.1. points in Q3, for example.
Reported revenues were more or less flat on the previous quarter in October to December, with four in ten respondents again noting a drop. “It is the seventh consecutive quarter to show a negative net balance of small firms reporting revenue growth, and underlines the need for the upcoming Spring Budget to build on the pro-grow measures in the Autumn Statement,” the FSB said.
Looking forward, almost exactly the same proportion of small firms expect their revenues to grow over the first quarter of this year as expect them to decrease at 32 per cent – a deterioration of about 3 percentage points from the Q3 survey. Additionally, the share of small businesses proportion predicting that they would contract in the coming year crept upward to 15 per cent from 12.7 per cent. In terms of the biggest perceived barrier to growth, the domestic economy came top, cited by just under 62 per cent of companies, down from 63.5 per cent in Q3.