Government must halt slide in confidence, warns FSB
THE FEDERATION of Small Businesses is urging the Government not to revisit shelved plans for tax increases on the self-employed as its latest Small Business Index shows confidence dropping among members.
The index is down to +15 in the second quarter of 2017, from +20 in the first quarter, marking the first fall in the index since the wake of the EU referendum.
When asked about threats to expansion plans, small firms are most likely to raise the domestic economy. More than half (52 per cent) see it is a barrier to growth. Consumer demand (30 per cent), labour costs (24 per cent) and the tax burden (17 per cent) are also commonly flagged.
Operating costs for small businesses are now at their highest in four years. A net balance of 66 per cent report increased operating costs in Q2 2017, up from 53 per cent in the same period last year.
Mike Cherry, FSB national chairman, said: “Small businesses were feeling more pessimistic even before the General Election was called. Now alongside increasing inflationary pressure, a business rates revaluation and rising labour costs, they have a whole new wave of political uncertainty to contend with.
“Clearly this is not the time to revisit failed plans for a national insurance hike on the UK’s 4.8 million self-employed. These strivers are the engine of our economy. In this unforgiving climate, the last thing they need is increased cost. This would act as a disincentive to business creation.”
He added: “With the election out of the way, there’s absolutely no excuse for local authority debt collectors chasing small businesses for incorrect, over-inflated bills without the emergency relief applied.
“The Communities Secretary needs to make distribution of this fund his top priority.”
The latest SBI is characterised by imbalances in confidence between different UK regions and business sectors.
Yorkshire, the North West and Scotland have the lowest regional confidence readings, while the East Midlands, Wales and London have the highest.
Small firms operating in the information and communication and manufacturing industries are some of the most confident this quarter.
Meanwhile, consumer facing businesses, such as those in the arts (-4) and retail (-9) sectors, have seen sharp drops in optimism.
Now they have a new wave of political uncertainty to contend with. Mike Cherry, national chairman of the Federation of Small Businesses.