Confidence among small business owners has sunk to its lowest level since 2008, with more firms expecting to contract or shut down than grow in the year ahead, according to a new survey by the Federation of Small Businesses (FSB).
The poll found that 27% of small business owners anticipate closing, shrinking, or selling their business in the next 12 months, compared with just 25% who expect to expand.
The figures reflect deep pessimism about the state of the UK economy and the pressures facing entrepreneurs.
Business owners cited the domestic economic climate as their biggest concern, followed by tax burdens and rising labour costs.
ECONOMIC CONTRACTION
The Times reports that the sentiment comes days after the Office for National Statistics revealed a 0.1% economic contraction in May and a week after data showed the hospitality sector has cut 69,000 jobs since October – the worst losses since the pandemic. Further job cuts are expected if the government’s minimum wage and national insurance rises remain in place.
The FSB has also raised the alarm over access to finance.
It recently submitted a super-complaint to the Financial Conduct Authority about what it calls “harsh lending practices”, particularly banks demanding personal guarantees, even for small loans.
DISCOURAGING GROWTH
The organisation warned that these guarantees are discouraging growth and driving entrepreneurs to abandon or scale back their plans.
A separate poll by Dext found that more than half of small and medium-sized business leaders believe the current climate is more volatile than during Covid.
Many have frozen hiring, made redundancies, or turned to emergency funding. Planning, they say, has become “virtually impossible” under the current economic uncertainty.
