Research from the Federation of Small Businesses reveals that confidence is on the up among small businesses – but recovery isn't being felt in all parts of the country
It only seems like yesterday we were reporting on the climate of uncertainty that was stifling SMEs' growth, at least until after the general election. However, following the Conservatives' shock victory on May 7, it seems the nation's small businesses have shaken off the shackles and are now looking confidently towards the future.
The latest Small Business Index from the Federation of Small Businesses (FSB) shows that confidence levels are now sitting at +37.9, up from +28.7 in Q1 2015, albeit slightly down from the all-time high of +39.7 a year ago. Encouragingly, 65.3% of small businesses said they aspire to grow moderately or rapidly in the next three months – the highest figure ever seen in the Index. The research also reveals that almost one third of businesses plan to increase capital investment over the next 12 months, while the balance of firms that have employed new staff has risen to 8.9%, up from the 2% reported 12 months ago.
Elsewhere, the FSB Productivity Index reveals that annual output per hour for workers rose by 1.4% year-on-year in Q4 2014, compared with 0.3% in the economy as a whole. Small business revenue and profits are also on the rise, with 24.1% of firms reporting increased revenues and 17.4% reporting higher profits. At 1.9%, wage increases are now in line with the overall economy – and the highest ever recorded in the SBI – while 28.6% of firms said they were exporting this quarter, up from a consistent 25%.
It's not all rosy though. The Index shows that business confidence remains highest in the south east but Wales has seen a fall in confidence and employment, with confidence in Scotland lower than the UK as a whole. And, echoing figures from the Chartered Institute of Personnel and Development last week, businesses are still concerned about the cost and availability of workers with the right skills; 35.4% of firms said this was a barrier to growth.
"The results of the Q2 Small Business Index are very positive and show the major role that small businesses play in the growth of the UK's economy," said John Allan, national chairman of the FSB. "It is critical the new government continues to develop the right environment to support businesses planning to grow, invest and take on new staff in the next 12 months."
There's still work to do but things are slowly heading in the right direction – thanks in no small part to Blighty's super small businesses.