Its latest Small Business Index reveals that confidence has fallen significantly and now stands at -13 for the fourth quarter of 2018. The national average is -9.9.
The second-lowest UK SBI reading since 2011 was recorded in the wake of the EU referendum (-2.9).
Around half of small businesses in the region expect their performance to worsen over the coming three months.
With EU net migration to the UK at a six-year low, skills shortages are intensifying. Almost three quarters of small firms in the region do not expect to increase capital investment in the coming three months and 16% are planning to actively decrease investment.
Nationally, this figure is at one in seven (15%) – the highest since Q3 2016 as businesses pause expansion plans amid unprecedented uncertainty.
Alan Todd, FSB area leader for Bedfordshire, Cambridgeshire and Hertfordshire, said: “We’ve not seen political uncertainty weighing on small business confidence like this for many years. Planning ahead has now become impossible for a lot of firms as we simply don’t know what environment we’ll be faced with in little more than 100 days’ time.
“The present uncertainty is very concerning to the region with the large number of international businesses trading in the area. Small businesses are in their supply chain and rely on their continued health too.”
Trade tensions between USA and China are compounding thre Brexit uncertainty, he added. The FSB fears a slowdown in investment affecting the trade links between Cambridge and China.
“A pro-business Brexit is one that ensures we can trade easily with the EU and have access to the skills we need,” said Mr Todd. “The latter is already proving a challenge and – if we crash out of the EU on 29 March without a deal – the former will go out the window.
“Politicians of all parties need to take account of the UK small business community’s mounting concern – the economic warning signs are now flashing red. MPs should talk to their local business community before the upcoming meaningful vote and be ready to act to protect the small businesses which employ 16 million people.”
He continued: “They need the Brexit issue resolved so we can get back to issues on the domestic agenda: a late payment crisis that destroys 50,000 firms a year, an outdated business rates system and spiralling employment costs.”
Nationally, small businesses are continuing to hire new personnel, with more than one in six taking on a member of staff in the past three months. 68% have increased pay compared to last year, significantly more than in the same period in 2017. Almost a third have increased wages by 4% or more.
The proportion of small exporters in the UK expecting international sales to fall next quarter has soared to a six-year high, surpassing 30% for the first time in that period. The figure is up 13 percentage points compared to Q4 2017. Almost half of small businesses still aspire to grow their businesses over the next 12 months.
Mr Todd said: “These figures are testament to the resilience of small business owners. They’re still hiring, increasing wages and aspiring to grow. There is a huge amount of drive and ambition among our members. If they’re given certainty and the support they need, their full potential can be realised.”