Small business confidence "still fragile"

   

A recent survey suggests that business confidence has declined over the second quarter of 2010, suggesting that the recovery remains fragile and more efforts should be made to encourage private sector growth.

In a survey of over 1,200 members of the Federation of Small Businesses (FSB), only a net four per cent of respondents believe that business prospects will improve in the third quarter of the year, down from 16 per cent in March.

The survey also suggests that almost 67 per cent of small firms are operating below capacity, with those in the manufacturing sector faring much better than service sector firms.

This further highlights how the UK economy is still some way from a full-speed recovery, with 64 per cent of firms in the South East likely to be working below capacity – more than anywhere else in the country.

With Government proposals to exempt the South East, London and the East of England from the National Insurance holiday for new businesses, announced in the Emergency Budget, the FSB is concerned firms in the region will not start-up and that existing businesses will not have the support they need to grow and take on more staff.

Key findings from the quarterly report show:

• Small business confidence has faltered each month since March with fewer small firms believing that business prospects will improve, down from 16 per cent to four per cent.
• The majority of small businesses are still operating below capacity, although the proportion of businesses has fallen slightly from 70.5 per cent to 66.6 per cent since the last report.
• Firms operating below capacity are more prevalent in the service sector than manufacturing and are more likely to be based in the South East.
• Revenue growth remains weak and is not expected to improve in the next quarter.

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