FSB: Unemployment figures confirm that recovery is still too fragile for small firms to take on more staff

As unemployment increased to 2.5 million, new figures from the ‘FSB Voice of Small Business Index’ show that while small firms are slowly moving into recovery they still aren’t in a position to take on more staff.

In a survey of over 1,400 members of the Federation of Small Businesses (FSB), 63 per cent of small businesses said they will keep employment levels on hold over the next three months which confirms that firms are not yet ready to take on more staff.

With GDP figures set to be announced on Friday 23 April, small businesses are showing signs of steady growth as the economy moves into recovery – a net balance of 16 per cent of small businesses expect their overall business performance to improve over the next three months.

But while the recovery is continuing steadily, it is still fragile – one in four (23 per cent) respondents expects their business situation to worsen over the next quarter, while two in five small firms expect no change in the performance of their business.

The FSB is concerned that while these figures do show that small firms are feeling slightly more optimistic about the future of their business, the job creators of the UK are still cautious about whether the recovery is strong enough to justify taking on more staff.

John Walker, National Chairman, Federation of Small Businesses, said:

“The rise in unemployment confirms that the economy is still too fragile for small businesses to take on new staff. With GDP figures expected later this week, small firms are showing signs that they are more confident about their overall business performance over the next three months.

“The ‘FSB Voice of Small Business Index’ shows that small firms are at the heart of the recovery but still need support if they are to get us firmly on that road to recovery and if they are to begin taking on staff again.

“The FSB is calling for a renewed economic stimulus to help small businesses continue to create jobs, get access to crucial finance, innovate and start up new businesses, to get us squarely on the road to recovery.”

ENDS

Notes to Editors

The FSB is the UK’s leading business organisation with over 213,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk

The ‘FSB Voice of Small Business Index’ is a quarterly macroeconomic report analysing the trends of small businesses in the UK market. To view the ‘FSB Voice of Small Business Index’ please go to www.fsb.org.uk

3. This report has been produced by the centre for economic and business research (cebr). The report is based on the March 2010 FSB-ICM ‘Voice of Small Business’ Panel survey of FSB members of 1,418 responses which took place between Thursday and 18 and Tuesday 31 March 2010.

4. For more information on ICM Research, please go to www.icmresearch.co.uk

5. For more information on cebr, please go to www.cebr.com