The latest Small Business Index (SBI), conducted by the Federation of Small Businesses (FSB), has shown a drop in confidence among small firms, the first decline since the EU referendum.
The SBI showed that business confidence was down to +15 in Q2 2017 from +20 in Q1.
Discussing threats to expansion plans, small firms are most likely to raise the domestic economy, with 52 per cent seeing it is a barrier to growth. Furthermore, 30 per cent flagged consumer demand, 24 per cent labour costs and 17 per cent the tax burden.
Broken down by geography, the East Midlands (+35), Wales (+31) and London (+25) reported the highest regional confidence readings, while Yorkshire (+14), the North West (+9) and Scotland (-4) are among the lowest.
Mike Cherry, FSB national chairman, said: “Small businesses were feeling more pessimistic even before the General Election was called. Now alongside increasing inflationary pressure, a business rates revaluation and rising labour costs, they have a whole new wave of political uncertainty to contend with.
“Clearly this is not the time to revisit failed plans for a national insurance hike on the UK’s 4.8 million self-employed. These strivers are the engine of our economy. In this unforgiving climate, the last thing they need is increased cost. This would act as a disincentive to business creation.
“Many small firms are still reeling from the business rates revaluation that took effect in April. The £300 million hardship fund announced at the Spring Budget to help those worst effected offered a glimmer of hope, but is yet to materialise. With the election out of the way, there’s absolutely no excuse for local authority debt collectors chasing small businesses for incorrect, over-inflated bills without the emergency relief applied. The Communities Secretary needs to make distribution of this fund his top priority.”