FSB calls for Brexit deal and ‘ambitious’ Budget as firms succumb to uncertaintyOct 12, 2019
SMALL firms are calling on the government to secure a Brexit deal and come forward with radical policy interventions to arrest a dogged lack of confidence among business owners as new research shows rising costs and uncertainty increasingly taking their toll.
In the East of England, the Federation of Small Businesses’ SBI confidence measure for Q3 2019 stands at -14, down from -5 in the last quarter.
Nationally, confidence is at -8.1, down more than six points compared to the same period last year. This marks a fifth consecutive negative reading – a first in the index’s history.
Almost three quarters of business owners surveyed across East Anglia do not expect their performance to improve over the coming three months. 45% in the region expect their performance to worsen, similar to the figure across the UK and the highest percentage for five years.
Small business owners continue to put investment plans on hold. In the East only 33% are planning to increase investment this quarter. Nationally, the figure stands at one in four– the lowest proportion in five years – and one in ten in the region are planning to actively decrease investment.
Those that do business internationally have been particularly hard hit by uncertainty. Only 24% report an increase in exports over the past three months, the lowest proportion in five years.
Meanwhile, a mere 13% of small employers are planning to take on additional staff in the next three months, the lowest proportion since Q4 2017.
FSB national chairman Mike Cherry said: “These findings must serve as an urgent wake-up call for policymakers. Even in the aftermath of the financial crash, we did not see such a sustained string of negative confidence readings. Three years of political uncertainty and rising costs have stifled output and left small firms unable to plan, invest and grow.
“There is a real sense of exasperation among small firms. Big decisions – whether that be taking on new staff, purchasing machinery or embarking on sales in a new country – are being put on hold because we have no idea what our trading environment will look like in less than four weeks’ time. And what is worse, two thirds of those that would be negatively impacted by a no-deal scenario say they cannot prepare for it.
“We need the government to seize this final opportunity to secure a Brexit deal: one that protects free trade, enables access to the right skills and includes a transition period. A no-deal exit in 27 days’ time would be a disaster.
“We also need to see the Chancellor come forward with an ambitious Budget aimed at reversing the impacts of uncertainty. He must throw lifelines to the small exporters that are especially hamstrung. Direct financial assistance – such as £3,000 Brexit vouchers – to enable access to expertise and support would mark a much-needed step forward.”
The overwhelming majority of small firms say operating costs are either stable or rising – two thirds say costs have risen over the past 12 months. The most frequently cited as main causes of this increase are Labour, flagged by 40% of firms, as well as inputs (31%), utilities (29%), fuel (24%) and regulation (23%).
Mr Cherry said: “The Chancellor must compile a Budget which alleviates the impacts of rising operating costs, rather than simply adds to them. That means uprating the £3,000 discount on national insurance bills for small employers offered through the Employment Allowance and reintroducing a Statutory Sick Pay rebate.
“Support with the costs of transport – especially fuel – and business rates would also help to reinject some optimism into a small business community that’s been held back by uncertainty for years now.
“Sole traders are also crying out for support in this unpredictable climate. Now is not the time to blindly push on with IR35 changes billed for April.”