The Federation of Small Business’ (FSB) quarterly Voice of Small Business Index (SBI), which measures confidence in UK small businesses through indicators such as capacity levels, employment and revenue, showed a declined of 1.1 points from -4.5 in Q3 to -5.6 in Q4 of 2012, although that was still a vast improvement on the -24.5 recorded in Q4 of 2011.
The survey, which was carried out in November 2012 by 2,546 FSB members, compared responses from those expecting deterioration in conditions in the coming three months to those anticipating an improvement or similar performance, to give an indicator of overall confidence.
Strength of responses are represented by positive and negative figures with -40 being a very negative and 40 being a very positive outlook, while a value of 0 would suggest that the business expected no change in conditions.
The report revealed that small businesses in the manufacturing sector were among those whose outlook fared worse than last quarter, dropping from a positive vlaue of 8 to a negative of -9. Those with the gloomiest outlook prospects were businesses engaged in hospitality with a rating of -46, while IT and business services showed more confidence in their markets recording outlook values of 19 and 10 respectively.
The report emphsised that employment had stablised in the SME market with most survey respondents expecting no redundancies in the next quarter. Whilst emphasising a cautious optimism amongst small businesses the report also highlighted rising fuel billls, credit conditions and labour costs as ongoing issues for the sector.
FSB national chairman John Walker said: "There's no doubt that it is still a tough environment and the Autumn Statement highlighted that it's going to be tougher for longer. However, small firms want to get on, grow their business and invest. We urged the Chancellor to put small firms at the heart of the Autumn Statement and many of his plans will help – especially raising the tax free investment limits.
But Walker said that more progress was needed on improving access to finance for small businesses. "While more small firms have been accepted this quarter, it is clear from our research that others continue to struggle.
He added: The SME finance monitor concluded that businesses are unconfident that the banks will lend to them. The fact that fewer firms applied seems to corroborate this and further highlights the broken relationship between small firms and the banks."
