Business Confidence Plummets Amid Rising Costs and Labour…

Business Confidence Plummets Amid Rising Costs and Labour Shortages Across Yorkshire

The latest research by the Federation of Small Businesses (FSB) demonstrates a sharp decline in confidence amongst small businesses in the Yorkshire, Humber and North East(YHNE) Region.

The quarterly Small Business Index (SBI) – which measures business confidence – demonstrates clearly the negative sentiment felt by business owners across the region, falling from +1% in Q1 of 2022 to -26% in Q2, slightly below the national average (-24.7%). For reference, the strongest performing region is the East of England (-10%), and the weakest being the East Midlands (-43%).

With the exception of a dramatic decline throughout 2020 at the peak of the pandemic (-51% average through the year), these figures show business confidence in the region is at its lowest since the quarterly survey began.

The challenging economic environment against a backdrop of surging operating costs, a high tax burden, and a significant labour shortage is devastating the small business community, threatening the futures of hundreds of thousands of small firms and sole traders. 

Other key headlines from the report are:

  • Confidence decreases from the previous quarter in 2022.
  • Businesses in Yorkshire, the Humber & North East report a return to a net negative balance in revenue over the last 3 months, following a net positive report in Q1 2022.
  • The number of small businesses in the area taking on new staff (12%) continues to outnumber those who are losing staff (16%) in Q2 2022.
  • Across the region, over half (64%) of small businesses increased the average salary awarded across the business over the last 12 months. 60% expect to see further salary increases over the next 12 months, with 51% reporting the likely increase to be above 2%.
  • The investment intentions for Yorkshire, the Humber & North East businesses turn negative in Q2 2022, falling below the UK average.
  • In Yorkshire, the Humber & North East, the general economic conditions in the UK (72%), consumer demand (37%) and input costs (28%) are the greatest perceived barriers to growth over the coming twelve months.

Richard Askew, England Policy Representative, said: 

“The cost of doing business crisis has worsened to the point where confidence is now at its lowest recorded figure outside of periods when significant trading restrictions aimed at halting the spread of Covid were in place.

“Small firms continue to try to absorb additional cost pressures and manage the challenges surrounding labour shortages but can only do so much before they’re forced to raise prices or scale-back their business. 

“The small business community reduced in size to the tune of hundreds of thousands over lockdowns. Businesses desperately need policymakers to act fast and help with the charges hitting them, or history is set to repeat itself. 

“We’re looking to prime ministerial candidates for unequivocally pro-business, pro-growth commitments. There is still time to act to support those businesses that are the backbone of our nation’s economy, but time is of the essenceand quickly running out.”