Hopes that small business confidence levels in the South West are bouncing back have been dashed by the results of a new survey, reflecting firms’ concerns over the economic outlook.
But while there has been a fall in confidence among the region’s smaller companies, some positive signs have emerged over their own growth aspirations.
The contrasting picture has come out of the latest quarterly soundings from Britain’s biggest business group, the FSB (Federation of Small Businesses).
The group’s first quarterly confidence report of 2023, released in the spring, revealed that business confidence in the South West underwent a sudden upsurge.
But the latest results suggest that momentum was short lived and optimism is now as fragile as it was last year.
The new figures – taken from responses to a questionnaire sent to FSB members and other small firms across the region in the first week of July – reveal that confidence dipped from minus 23 points to minus 24, reflecting, said the FSB, “the concerns that the economic situation remains very difficult for many small business owners and the self-employed”.
However, it said the headline fall in confidence appeared to be mainly due to the general economic situation, sluggish consumer demand and rising costs – when quizzed about their own prospects, many firms felt the situation was going to approve, see infographic below.
Nearly half of those surveyed in the South West said their aspirations for the next 12 months were to grow ‘rapidly or moderately’ – a steep increase over the last quarter – while nearly one in five planned to increase headcount in the coming months.
FSB regional policy chair Craig Carey-Clinch, pictured, said that although the headline figures were disappointing these signs were something to build on.
“The reality is that business confidence – like the economy that influences it – is just in a totally uncertain place. All we can hope is that some of the positive signs we are seeing can be built on and increasing confidence can start to become the norm again rather than the exception.
“We at FSB will continue to work hard with leading policy makers to stress that small businesses can and will do their bit to try and get things moving forward again but they can’t do it alone. Pro-small business policies are essential to get SME confidence firmly back on track.”
The FSB regional figures also echo the results of the latest Lloyds Bank Commercial Banking monthly Business Barometer.
As reported by Bath Business News last week, this showed a continued – if fragile – recovery in optimism among firms in the South West.
The FSB’s South West survey findings also show that, while confidence in the region fell, the reduction was not as dramatic as in the UK-wide picture that emerged from its national survey results.
FSB national chair Martin McTague said he too was trying to focus on the positives in the report.
“Although the upturn in small firms’ confidence from the first quarter didn’t carry over into the second quarter of the year, the message from our research is that small firms’ confidence in the future is looking rosier,” he added.
“Given the right conditions for growth, small firms have the potential to power a groundswell of economic activity.
“With the domestic economy the biggest perceived barrier to growth, however, they are in something of a catch-22 situation.”
