Business confidence trails national average, says FSB

By Tim Aldred

12 May 2023

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The Federation of Small Businesses has reported that while business confidence across the North West has turned a corner in recent months, it still sits in negative territory and lags significantly behind the national average.

The latest FSB Small Business Index (SBI) research shows that confidence in the region sits at -11. That's up from the -48 registered over the previous quarter, but behind the -3 recorded across the country as a whole.

Small businesses in the North West continue to face the ongoing impact of economic uncertainty and inflationary pressures.

General economic conditions (49 per cent), utility costs (43 per cent), and consumer demand (36 per cent) are the greatest perceived barriers to growth in the North West over the next 12 months.

Utility costs have notably grown as a concern for businesses in the region, compared to the previous quarter, with 27 per cent citing this as a considerable issue.

Overall, 42 per cent of small businesses in the North West reported a decrease in revenue over the past three months. However, there are some signs of resilience – a total of 40 per cent reported revenue increases during the period.

Holly Bonfield, FSB North West Regional Chair, said: "It is welcome that North West small business confidence has turned the corner and rebounded strongly from the previous quarter, but it is still in negative territory and lags worryingly behind the UK average.

"There are dark clouds on the horizon – such as the prospect of further interest rate rises, access to finance issues and, of course, increasing utility costs – which threaten to undermine these green shoots of recovery.

"The withdrawal of the Energy Bill Relief Scheme leaves a group of small firms exposed to high prices in fixed-rate contracts from last year unable to negotiate a new contract – due to a standoff between energy companies and government. Utility bills were still cited in our survey as a driver of inflation and a barrier to growth, despite the EBRS only closing at the end of the first quarter."

“Small businesses have shown incredible grit and determination in the face of adversity. FSB’s latest research provides a glimmer of hope that things are looking up in the North West so it's important that all businesses are effectively supported to allow them to realise their potential, overcome the challenges we have outlined, thrive, and grow.”

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