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June 21, 2013

Small business confidence hits three-year high

Confidence among small businesses has risen to its highest level in three years according to the latest Small Business Index from the Federation of Small Businesses (FSB), with confidence rising across all parts of the UK and in most sectors.

The Small Business Index is the FSB's measure of confidence. It reached 15.9 points in the second quarter of 2013 – 9.6 points higher than at the start of 2013 and the second highest reading since the Index began in 2010.

Financial services firms reported the highest confidence levels. And despite recent output contractions in the manufacturing sector, small manufacturers were more optimistic about their prospects, suggesting that conditions in this sector are improving.

Other key findings from the report show:

  • more firms expect turnover to increase in the coming three months, and more firms expect to grow their business in the coming year;
  • a larger number of firms expect to increase staffing levels in the coming three months;
  • more small firms report rising exports and export growth is expected to pick up further in the coming three months;
  • retail businesses remain least confident;
  • inflationary pressures from rising energy prices are the main driver of increased business costs.

With the Chancellor due to deliver his Spending Review next week, the FSB is calling on George Osborne to build upon these positive figures with initiatives for growth. In the light of the latest figures on lending for Q2 2013, which show that four in 10 firms applying for finance were refused, the FSB wants to see the Spending Review set a clear plan for the Business Bank to improve competition in the banking sector.

John Allan, FSB national chairman, said: "After five consecutive quarters of year-on-year growth, confidence is moving in the right direction. Small firms want to employ more people and grow their business. They want to export and expect turnover levels to increase. This is all good news, but we must not be complacent. The Chancellor must use the Spending Review to build on this optimism. While there are positive signs, inflation and not being able to access finance will affect how quickly, and how much, small firms can grow and create jobs."