FSB commits to working even closer with leading business organisations to help firms hit by soaring costs, high taxes and staff shortages.
The latest quarterly Small Business Index from the Federation of Small Businesses (FSB) shows a sharp decline in small businesses confidence across the North West, prompting a commitment from the FSB to work even closer with other leading business groups in Cheshire and Warrington.
The quarterly index shows a fall from +3% in Q1 of 2022 to -27% in Q2 – below the national average (-24.7%). Comparatively the strongest performing region is the East of England (-10%), and the weakest being the East Midlands (-43%) – but all regions have returned a concerning level of confidence.
With the exception of a dramatic decline throughout the pandemic, 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.
Paul Wareham, North West England Policy Representative, said: “Small Businesses have reported a tough second quarter of 2022 as multiple issues dampen the ambition shown in the first quarter of this year. Confidence amongst small businesses in the North West has plummeted from a +3 reading in Q1 to -27 at the end of Q2. The optimism felt at the turn of the year has disappeared for many small businesses who are seeing rising costs across the board, with recruitment difficulties and supply chain complications also causing headaches.
“FSB continues to make the case for extra support to small businesses to get them through a difficult period. The lack of business confidence makes business planning and investment very difficult for the smallest firms and we need to see this turnaround quickly.”
Key headlines from the report are:
- While 50% of small business respondents aspire to grow in the coming year, 25% expect a fall in investment in their businesses, suggesting that those aspirations may need to take a back-seat for now.
- Of those businesses which expect to grow, two thirds (65.1%) cite the domestic economy as a potential barrier to expansion, a figure which has risen from 58.6% in the Q1 report;
- Fuel (cited by 64.2%) and utilities (63.5%) were the main factors behind cost increases, both up notably from the first quarter and much higher than this time last year.
- 44% of businesses reported falling revenue, with 36% saying that income has increased – and 38% expect revenue to fall again in the near future.
- Lack of access to appropriately skilled staff was also noted as a significant concern by 33.9% of businesses. Q2 2022 also saw more small businesses reporting a fall in employee numbers than growing their payrolls, the first time this has happened since Q1 2021.
- More positively, a net balance of 7.2% of respondents anticipate that their employee base will increase in size in Q3, although this is around half the figure who predicted the same ahead of Q2 (14.5%), and many may find it difficult to get the people they need on board.
- 63% of small businesses expect the wages they pay to increase in the next 12 months, but this figure is starting to slow, in the previous quarter 74% expected wages to rise. This could be indicative of affordability.
The Cheshire Business Group (CBG)
Throughout the pandemic, Cheshire Business Group (CBG), which is Chaired by the FSB, has acted as an effective platform to co-ordinate local business opinion to national and local government, providing access to support and guidance and an ‘on-the-ground’ source of SME data and information.
The CBG has the most extensive membership of all employer representative bodies across Cheshire and Warrington. For many years it has served as a collaborative body allowing these membership organisations to engage and work with the Cheshire and Warrington Local Enterprise Partnership (LEP), and local and national government representatives, on economic and enterprise strategy, and in the provision of support for businesses.
Membership includes the CBI, all five Chambers of Commerce (East Cheshire, North Cheshire, Warrington, West Cheshire and North Wales and Chester and South Cheshire), the Federation of Small Businesses, the Forum of Private Business, the IOD, the National Farmers’ Union (NFU), Cheshire Business Leaders and several prominent Business Improvement Districts.
Darren Shaw, FSB Area Leader for Cheshire, said: “FSB’s Small Business Index figures are certainly concerning and we need action from the government now to help businesses struggling with this cost squeeze – a reversal the recent hikes to national insurance contributions, reducing business rates for small firms, a cut in VAT, particularly on energy, where we’re also saying the Government should extend help for households provided through the council tax system to micro businesses through the rates system, and targeted reductions in fuel duty.
“In Cheshire and Warrington it is important to remember we have a great group of committed people from the major business organisations who are working together every day to help and support local businesses. FSB is committed to further developing this collaborative work, which has been forged over many years of the Cheshire Business Group’s existence, and I am confident that we extremely well-placed to continue to help, support and guide small businesses through these challenging times.”
