As 29th March—the original ‘Brexit Day’ dawned—the publication of the latest Small Business Index (SBI) presented a worrying picture of poor expectations and falling revenues among small businesses.
Sustained pessimism ‘a first for SBI’
The UK-wide SBI confidence measure remains negative in Q1 2019 (-5.0), which is a significant drop compared to a year ago (+6.0) and the third consecutive negative reading for the headline index.
The Federation of Small Businesses (FSB) statement on the index said that ‘such sustained quarter-on-quarter pessimism is a first for the SBI, which launched in Q1 2010.’
The index shows that:
- Export expectations for the coming three months are at the lowest point in the index’s nine-year history, with just 27% of exporting smaller businesses expecting their exports to increase in Q2 (compared to 42% during the same period last year)
- 66% say international sales are steady or falling – up three percentage points compared to Q1 2018
- 37% say revenues are down (an all-time high) with 25% reporting that they’ve stayed steady. Only 38% expect rising revenues, down significantly from Q1 last year (45%).
- Recruitment rates are down; a record low of only 11% of small firms have taken on new staff, while 12% are actively decreasing headcounts
- 70% of small businesses do not expect their performance to improve in the coming three months
“1,000 days of uncertainty”
FSB national chairman Mike Cherry said that small firms had been told the UK would be leaving the European Union on 29th March “with a good understanding beforehand of what the future would hold.”
“Instead, we’ve suffered 1,000 days of uncertainty since the Brexit referendum, leaving us unable to plan, invest and grow”, he said.
The FSB has called on the UK Government to follow the example set by Ireland and the Netherlands by giving smaller firms vouchers that can be spent on preparing for future trade scenarios. Mike Cherry makes it clear he blames the politicians, and especially the Government, for the current predicament of small businesses and the thousands of pounds smaller firms have had to pay for scenario planning.
“While many politicians have prioritised machinations, the smaller businesses that make-up 99% of our economy have been left in the dark.
He said the vouchers would allow small businesses to access the advice, equipment and upskilling they need to future-proof their businesses, and that making soft loans available to them for this purpose would be useful too.
“Looking ahead to next week, smaller firms will be hit with a triple whammy of Making Tax Digital, business rates hikes, and higher auto-enrolment pension contributions,” he warned.
“These fresh burdens couldn’t be coming at a worse time.
“We’ve already seen the UK business population drop in 2018. If this Government’s not careful, we could see a further contraction this year.”
How has Brexit uncertainty affected your business, and at this stage, what measures do you have in place to protect your business?