Business confidence shows no sign of improving from the latest FSB survey of small businesses in the South East.
From -28 in quarter 3 of 2022, the year ended in quarter 4 with business confidence dropping to -39. This level is the lowest seen since the -147 score recorded at the beginning of lockdown in 2020. These are the most difficult times small businesses face. Having fought their way out of lockdown a new set of long-term challenges face all SMEs.
Depressingly, there was no Christmas bounce that FSB members reported at the beginning of 2022. Revenue for the last quarter was down, with a net score of -12%, a decrease from -10% in the third quarter of 2022. 29% of businesses reported an increase in revenue, compared to 41% that reported a decrease. Looking ahead to the next quarter, SMEs predict a further fall, anticipating an 18% drop in revenue for the first quarter of 2023.
Employment levels have continued to fall in the South East, with a widening gulf between those taking on new staff and those reducing staff numbers. Only 7% reported an increase in staff numbers, with 17% reducing staff. This is well below the predictions of the last quarter, where businesses anticipated an 18% increase in recruitment. In a wider context, however, over 70% of businesses plan to stay at current staffing levels. Over half (55%) increased wages by 2% or more in the last twelve months. This, however, is a slowing trend. Previous quarters have shown a net increase at the two-thirds level. Wages have also not risen as fast as SMEs have predicted.
Linda Garcia, South East policy representative for FSB said, ‘The government have set themselves some challenges this year that they must deliver on. If their plan works and inflation halves, interest rates should come down and this will ease pressure on businesses. But with the energy price guarantee withering away, energy-intensive businesses will lose much needed support and this is a worrying concern.’
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