FSB forecast shows economy gaining momentum
Small business confidence has reached an all-time high, according to the Federation of Small Businesses’ latest Small Business Index published today.
The confidence Index rose to +33.5 in the third quarter of 2013, beating the previous high of 18 recorded in the first quarter of 2010 and is double the 15.9 score from the second quarter of 2013. The data shows three successive quarters of growth in 2013.
Confidence has improved for firms across most sectors and most UK regions. And, as a result of this improved confidence, the investment in people and businesses needed to boost the economy is beginning to feed through, says the report.
For the first time since the report began more firms are looking to take on staff than reduce their workforce and spare capacity has fallen back meaning that more firms feel confident to grow.
With four in 10 firms reporting increased revenues in the last three months, investment intentions among small firms, imperative to strengthen and rebalance the economy, are at the highest point since the FSB began tracking this area.
This quarter, the number of firms intending to increase capital investment in the next 12 months rose to 21.1 per cent, up from 9.9 per cent in the same quarter in 2012.
Furthermore, the proportion of firms with ambitions to grow has risen to 54.2 per cent up from around 51 per cent in Q3 2012. If realised, the FSB believes that the small business sector could provide the momentum to further economic recovery.
John Allan, National Chairman, Federation of Small Businesses, said: “Optimism, growth and confidence can be used to summarise this quarters findings. Following from the Chancellor’s speech on the state of the economy, small firms are clearly helping the economy gain momentum compared to the same point last year.
“The economy needs to have confident small and big businesses to make sure jobs and wealth are being created for UK-plc. But at the same time, businesses need to have confidence in the economy to take the risk to create jobs and invest.
“With more firms looking to grow rather than downsize, it’s clear these feelings are returning. Government needs to build on this and the Autumn Statement is the right time to do that.”