PAUL FARRINGTON: how to reverse waning business confidence
The final three months of 2021 sadly had something of a Groundhog Day feel for the small business community.
Surging Covid cases, mass event cancellations, last-minute changes to trading rules and staff shortages – there was much in the challenges facing firms over this festive period that rang true for the last.
It therefore isn’t a surprise to hear that business confidence fell significantly at the end of 2021 according to the Federation of Small Businesses (FSB), the third consecutive quarterly fall.
The small business index, which the FSB uses to represent business confidence, fell by 24.9 points between Q3 and Q4 to reach -8.5, the first negative reading since the fourth quarter of 2020.
Waning confidence was especially pronounced in the accommodation and food services, falling by 35.4 points to stand at -33, and communication services, which fell by 35.1 points to stand at 11.4.
However, as the survey was conducted before the Government announced a move to “plan B” measures, the FSB said “it is likely confidence will have dropped further in the meantime”.
Businesses faced many challenges in Q4 2021, the FSB added, including a surge in COVID-19 cases, mass event cancellations, rising utility costs and preparations for full import checks for EU goods.
On 21 December 2021, the Government announced £1bn in additional support to businesses most impacted by Omicron.
Mike Cherry, national chair, and Martin McTague, vice chair of the FSB, said: “Small firms have once again shown their resilience over the past two years, tirelessly adapting and innovating, and soldiering on through yet another incredibly stressful golden quarter.
“What they need now is for this Government to rediscover its pro-enterprise, reforming zeal and come forward with policies that will empower a small business-led recovery, whilst eschewing tax hikes that will hurt communities and stifle growth.”
(Paul Farrington is a partner at NR Barton Chartered Accountants)
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