Confidence among the South West’s firms has fallen once again and is now significantly below the national average, according to two new surveys.
The latest quarterly report from the Federation of Small Businesses (FSB) reflects a level of SME pessimism among members across the region not seen since the aftermath of the financial crash nearly a decade ago.
And the latest Business Barometer from Lloyds Bank published today reports that firms in the South West now have less confidence in their business prospects, with a fall of nine points since November to 16%.
The FSB figures reveal that in the South West almost half – 46% – of small businesses expect their performance to worsen over the coming three months, with fears with the uncertainty over Brexit having an impact on views about trade and investment.
Of the South West members who took part in the survey – which was conducted before the most recent dramatic Brexit-related political events – 70% do not expect to increase capital investment in the coming three months – with 17% of them planning to actively decrease investment.
Skills also remains a local worry with the number of small firms in the South West region citing lack of access to appropriately skilled staff as a barrier to growth having risen to over a third.
FSB Bristol area lead Ken Simpson, pictured, said regardless of peoples’ views on Brexit the results show that what happens in Parliament does have a direct impact on the plans and activities for business.
“These figures clearly show that uncertainty is a huge factor in business confidence – and this is a very uncertain time indeed,” he said.
“Politicians of all views need to take account of the fact that the UK small business community is the driving force of this economy and it needs stability to continue to do so. We can’t just ignore these falling confidence figures here in the South West as traditionally this has been one of the regions with the most positive outlook,” he said.
FSB national chairman Mike Cherry said that the sooner the Brexit negotiations and debate could be concluded, the quicker politicians can concentrate on other issues that can affect business confidence.
“We’ve not seen political uncertainty weighing on small business confidence like this for many years,” he said.
“As things stand, Brexit is absorbing all of the UK’s political bandwidth. Once resolved, we must get back to issues on the domestic agenda: a late payment crisis that destroys 50,000 firms a year, an outdated business rates system and spiralling employment costs.”
On the plus side, the FSB report shows that 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. Nearly seven in ten have also increased pay compared to last year, significantly more than in the same period in 2017.
Mike Cherry added: “These figures are testament to the resilience and grit of small business owners’ right across the UK. They’re still hiring, increasing wages and aspiring to grow. All is certainly not lost. There is a huge amount of drive and ambition among our small businesses. If they’re given certainty and the support they need, their full potential can be realised.”
The Lloyds Barometer shows sentiment about the economy flipped in the last month, with a net balance of 1% saying they are pessimistic, compared with a balance 16% who were optimistic in November.
Companies’ hiring intentions showed that a net balance of 12% of businesses in the region now expect to hire more staff during the next year, down nine points.
Lloyds Bank Commercial Banking South West regional director Adam Rainey said: “A different picture has been painted across the South West this December compared with November, which is likely a result of ongoing uncertainty.
“While last month we saw firms looking to hire and start next year with investment and growth in mind, we are now seeing management teams adopt a more cautious approach.
“As in the UK as a whole, overall confidence has taken a dip but firms in the South West have shown great resilience in the past. There is a wealth of opportunity for the region as we approach the new year from continued opportunities in the Hinkley Point C supply chain and a booming aerospace sector, to the demand for skilled jobs along the M4 corridor.”
Across the region, a net balance of 15% of businesses said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity, compared with 13% a month ago.
