The latest survey from the Federation of Small Businesses (FSB) highlights a concerning downturn in small business confidence across the UK.
Rising wage costs have emerged as the key factor behind this decline, posing significant challenges for small business owners.
The FSB’s Small Business Index reported a sharp decline in confidence during the second quarter of the year. The index, which surveys over 1,000 small businesses, recorded a confidence score of -10.8, a significant drop of 16.3 points from the previous quarter.
Small business owners are grappling with unprecedented employment costs. According to the survey, soaring wages were cited as the primary driver behind the steep drop in confidence.
FSB policy chair Tina McKenzie warned that rising labour costs could stifle economic growth and reduce small business job numbers.
McKenzie called on the government to index the employment allowance to the rising living wage to alleviate the pressure on small firms.
The accommodation and food services sector saw confidence drop to -15.9, down from -11.8 in the prior quarter. Manufacturing, once the most optimistic sector with a score of 19.2, saw a dramatic decline to -12.7. The information and communication sector’s confidence fell to -9.2 points, and the professional, scientific, and technical sector dropped to -2.6 points, making it the least negative among the major sectors.
The FSB’s report underscores the urgency of implementing tailored measures to address sector-specific challenges and restore confidence among small businesses.
Targeted support and policy reforms are essential to alleviate the financial strain on small businesses and foster a more favourable economic environment.
The latest FSB survey clearly indicates the pressing need for governmental intervention to support small businesses grappling with rising costs.
Immediate action is required to prevent potential job losses and ensure the sustainability of small enterprises.
