Fifth of firms have pessimistic outlook, says FSB survey

A fifth of small firms expect the economy to be “much worse” over the next three months with just one in 10 expecting the opposite, according to Federation of Small Businesses (FSB) research.

Small business expectations of future performance are increasingly polarised, according to the latest quarterly Small Business Index (SBI) from FSB, which shows that a sizeable share of firms have already had to let staff go.

Over a fifth (23%) of the 1,400 business owners surveyed for the study expect their performance to be “much worse” over the coming quarter compared with the last three months. The figure is up 13 percentage points compared with this time last year but is down considerably on Q1 2020. The proportion who expect their prospects to be “much improved” compared with the last quarter has risen significantly, standing at just above one in ten (13%).

More than half (58%) of firms surveyed expect their performance to remain stable or worsen over the next three months. Four in ten (42%) expect a relative improvement as lockdown restrictions lift. Three quarters (75%) say that coronavirus is still having a negative impact on their confidence levels. The figure stood closer to nine in 10 (88%) in Q1.

Those in the construction and accommodation and food service sectors are among the most confident about a relative uplift in performance next quarter, with 29% and 26% expecting a significant improvement respectively. Among the least confident are those in the wholesale and retail, and arts and entertainment sectors, where only 13% and 2% think likewise.

FSB National Chairman Mike Cherry said: “The majority of small business owners have benefitted from the Government’s emergency support measures but many have not. We urgently need to see the Treasury outline how it intends to support those who have been left out, not least company directors and the newly self-employed.

“Additional help for those who are being forced to stay closed while others re-open is also a must. We have to avoid a scenario where those who’ve received support are able to navigate choppy economic waters over the months ahead while others are left to sink.”

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