Small business confidence in the North West recovers despite increasing costs

Small business confidence has recovered in the North West despite increasing operating costs, according to the Federation of Small Businesses (FSB)’s latest quarterly Small Business Index (SBI).

The SBI, which reflects how firms expect to perform over the coming quarter, reached +5 across the region in Q4 2016, up from -14 in the previous three months. This means that more businesses feel confident than pessimistic. Small business confidence rose to +8.5 for the UK as a whole in Q4.

Almost all (87%) of small firms in the North West expect to remain the same size or expand over the coming year. One in four (28%) exporters surveyed expect to increase overseas sales in the next quarter.

Small businesses in the region face challenges, however. Around two thirds (62%) report an increase in the cost of doing business compared to the same period last year, with labour costs mentioned most frequently as the main cause of this increase (25%).

Gary Lovatt, Chairman of FSB Lancashire & Cumbria Region, said: “Small business confidence is showing resilience following the uncertainty reported in the wake of the Brexit vote, which is good news.

“In particular, small exporters continue to be ambitious. The fall in the value of the pound will certainly have had an impact but we shouldn’t underestimate efforts to make UK goods and services more competitive overseas and help small businesses go out to find new markets and new customers.

“However, with business costs rising, significant challenges lie ahead for small business owners and there is still a long way to go to create an enterprise environment in the UK that genuinely supports business growth. This will become more urgent as we move closer to leaving the EU.

“We look forward to a March budget which simply must be pro-business and pro-growth – increasing the Employment Allowance to help small firms boost job creation would be a good place to start.

“In addition, FSB is committed to working with local agencies in Lancashire and Cumbria to make the region the best it can be in which to start and grow a business.”

The next FSB Small Business Index for the first quarter of 2017 will be published in April.