Small businesses across Britain have raised their concerns about weak economic growth, consumer demand and high lending rates in the latest Federation of Small Businesses (FSB) Small Business Index (SBI), published today.
Amid persistent political uncertainty, the domestic economy is flagged more often as a growth constraint by small businesses than any other common barrier to expansion. Close to six in 10 (58 per cent) say it is a significant barrier to growth, up from 55 per cent at this time last year.
Access to appropriately skilled staff (36 per cent), lack of consumer demand (29 per cent) and labour costs (21 per cent) are also frequently flagged as primary barriers to growth.
The London Small Business Index (LSBI) stands at, 16 in Q4 2018, reflecting a level of pessimism not seen since the aftermath of the financial crash.
FSB national chairman, Mike Cherry said, “How have politicians allowed it to come to this? Two and half years on from the Brexit vote and small businesses are looking ahead to Brexit day with no idea of what environment they’ll be faced with in less than ten weeks’ time.
“The danger of a serious economic shock posed by a chaotic no-deal Brexit is real and imminent. It’s time for politicians to stop the in-fighting and agree on a cross-party way forward.
“The current uncertainty is making it impossible for firms to plan, hire and invest. That’s feeding into wider concern about the economy at large. We won’t see GDP growth pick-up again until there’s some certainty about how the business environment will change in the coming months.
“Come the beginning of April, small firms will not only have Brexit day to worry about but also Making Tax Digital, a higher living wage, rising auto-enrolment contributions and further business rates hikes. This will be a flashpoint for a lot of businesses, threatening the futures of many.”
The new SBI also shows borrowing costs for small businesses soaring. The proportion of successful credit applicants being offered a borrowing rate of five per cent or more has hit a record-high (74 per cent).
The proportion of small firms applying for external finance remains stubbornly low at around one in eight (13 per cent).
Cherry added, “With Brexit taking up all of the Government’s bandwidth there are a huge number of domestic business issues that are not being addressed. They include the long-standing barriers small firms face when trying to access new finance, and the sky-high borrowing rates they’re often offered if an application is successful.
“This is another issue that will be exacerbated by a chaotic no-deal Brexit. When times are tough, big lenders often put supporting small businesses on hold.”