FSB: Small business confidence ends 2010 at its lowest level

Small businesses ended 2010 less confident than they were at the beginning of the year, according to the Federation of Small Businesses’ (FSB) latest ‘Voice of Small Business’ Index.

The report, which looks at the general health of the small business sector, has found in the fourth quarter of 2010 that business confidence fell for the third successive quarter to a net score of -13.2, the deepest decline since the survey began in March 2010.

Overall, the figures show that the private sector recovery lost momentum in 2010, and as the constraints on businesses cash-flow increased from utility bills, fuel duty and VAT combined with the public sector cuts, growth in 2011 is also likely to be sluggish at best.

The severe weather at the end of the year and the rise in VAT to 20 per cent at the start of 2011 have both had an impact of small firms’ confidence, especially those businesses operating in service and consumer focussed sectors such as restaurants, hospitality and retail sectors and those in the transport sector.

The report also shows that small businesses expect employment growth to weaken in the coming months, with 77.7 per cent of small firms expecting to keep employment levels the same, but 12.4 per cent expecting to decrease the number of staff they have – up from 10.4 per cent in quarter three.

The FSB is urging the Government to bring forward plans for growth that includes a competitive tax system to help boost employment and to keep to its manifesto pledge to introduce a fuel duty stabiliser. The Bank of England must also keep the base interest rate at 0.5 per cent to help keep the focus on growth.

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

“A number of pressures on small businesses are beginning to come to a head, such as the increase in VAT and fuel duty, placing more strain on cash-flow. This combined with the severe weather at the end of 2010 has meant that small firms are not as confident about their prospects in 2011.

“With inflation above target and the labour market still weak, small firms cannot rely solely on the consumer for growth in 2011. So it is imperative that the Bank of England base rate is kept at 0.5 per cent, as once the impact of the VAT rise is excluded, inflation is relatively low.”

ENDS

Notes to Editors

The FSB is the UK’s leading business organisation with over 210,000 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

Net confidence scores in 2010 were Q1: 16.2, Q2: 4.2, Q3: -3.6, Q4: -13.2

The ‘FSB Voice of Small Business’ Index is a quarterly macro-economic 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

This report has been produced by the centre for economic and business research (cebr). The report is based on 1,591 responses from the December 2010 FSB ‘Voice of Small Business’ Survey Panel of FSB members which took place between 7 and 17 December 2010.

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Contacts

Andrew Cave, Chief Spokesperson: 07917 628991
Prue Watson: 020 7592 8121/ 07825 125695 prue.watson@fsb.org.uk
Sara Lee: 020 7592 8113/ 07595 067068 sara.lee@fsb.org.uk

For regional FSB contacts please go to www.fsb.org.uk