Small businesses show record levels of confidence

19 September 2014

Small businesses show record levels of confidenceSmall firms are more confident than ever about their immediate prospects, according to the latest survey results from the Federation of Small Businesses (FSB).

The Small Business Index – the FSB's measure of confidence – reached +41 points in the third quarter of 2014. It is the first time the sentiment has reached this level, with every sector recording a positive outlook for the upcoming three months.

Three-fifths of the small businesses surveyed (61%) are expecting to grow in the next 12 months. And 11% expect to grow rapidly. This is the seventh consecutive quarter that small businesses have been positive about their outlook.

Regionally, the North East is showing the greatest gains compared to a year ago, recording a confidence score of +44, compared to -7 in Q3 2013. The South East remains the most confident region overall, registering a score of +52.

Small firms also report good news on turnover, profits and job creation. 33% of businesses surveyed expect their turnover to grow in the next quarter and 17% expect profits to rise. The most confident sector remains financial services (+62).

Job creation is robust too, with small firms' hiring intentions at an all-time high. A net balance (+5%) of small businesses increased headcounts this quarter, a trend that looks set to continue in the next quarter.

However, the FSB warns that barriers to growth still exist, including weak consumer demand and growing skills shortages.

John Allan, FSB national chairman, said: “We're seeing record breaking confidence from our members which suggests small firms will continue to spearhead the UK's recovery. We want policy-makers to lock in this optimism and continue to back the self-employed and small businesses. As we head in to party conference season, we'll be looking to all the political parties to spell out what they will do to encourage job creation, investment and reward entrepreneurs in the next Parliament.”

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