The FSB Quarterly Small Business Index (SBI) published today shows small business confidence in Yorkshire, the Humber & North East has fallen in the previous three months having bounced back in the previous survey. The general economic conditions in the UK is the biggest factor identified for this decline in confidence.

The FSB produce a SBI survey every three months. In it they track how confident business owners are for the next three months. They subtract those not confident from the number who are, to produce an overall confidence figure. The latest figure is back in negative territory. It is at -2, falling from +31 in the last survey. Small business owners in Yorkshire, the Humber & North East say that the general economic conditions in the UK (56%), tax burden (30%), consumer demand (30%), utility costs (29%) and labour costs (26%) are the greatest perceived barriers to growth over the coming twelve months.

FSB’s survey also finds more small businesses have reduced head count in the previous three months than increased it (13% decreasing and 10% increasing). However, there is some optimism here as slightly more expect to increase headcount in the coming three months (11% to 2&%, with 75% expecting it to stay the same).

Other key findings from the FSB research are:

• Small firms are ambitious. The SBI survey shows 51% of small businesses in Yorkshire, the Humber & North East think they will grow in the next 12 months.
• Investment is set to fall slightly, with 22% of businesses owners looking to increase investment in their business and just 25% reduce it.
• Overall more small businesses saw revenue down rather than increasing.

Nancy Prest, Regional Policy Representative for Yorkshire, the Humber and the North East, said, “After a strong start to 2024, we were all hoping that the latest quarter would be just as positive for small businesses – if not more so. But sadly it is not to be.

“Small businesses are looking with trepidation at the Government’s forthcoming plans to change employment, which could both increase risk around small businesses employing people, and the costs when they do. The rise of labour costs will hold back economic growth, and points to the possibility of a contraction in small business job numbers, which would be terrible news for firms, for staff, for local communities and for our regional economy.

“It is also worth noting that our national figures show that the construction sector has the lowest confidence reading among the major sectors. This underpins our calls for more support for small housebuilders, especially as the Government’s homes target cannot be achieved without new policies to unlock the potential of small housebuilders.