East Midlands small business confidence has tumbled in the last quarter, showing concerning signs way beyond the national average, a new report reveals.
The Federation of Small Businesses’ quarterly Small Business Index (SBI) for the East Midlands shows a Quarter 2 reading of -43, which is significantly down from 17 in the previous quarter. Whilst this drop in confidence mirrors other parts of the UK, the East Midlands has seen a more dramatic fall than the national average, which over the last quarter went from 15 in Q1 2022, to -25 in Q2 2022. The figure is the lowest recorded outside of periods when significant trading restrictions aimed at halting the spread of COVID were in place.
In the East Midlands, the greatest perceived barriers to growth over the coming twelve months are the domestic economy (63%), appropriately skilled staff (33%), and fuel costs (30%). Concerns over appropriately skilled staff have notably increased since Q1, when the respective score stood at 15%.
In Q2 2022, 44% of small businesses in the East Midlands reported a decrease in revenue, as economic uncertainties impact consumer habits and business performance. Resilience is also falling; in Q1 2022, 43% of small businesses in the region reported an increase in revenue – this has slipped to 30% in Q2, a fall of 13%. Nationwide performance is slightly higher, with 35% of businesses reporting an increase in revenue in Q2.
East Midlands scores the worst in terms of an employment level decline compared to other regions in the UK, with ‘actual’ employee cuts worse in Q2 than was predicted in Q1. The employment situation for East Midlands small businesses has seen a return to net negative figures, with 18% decreasing staffing in Q2 2022 (versus 11% in Q1).
In Q2 2022, 6% of East Midlands small businesses reported an aspiration to grow rapidly (increase turnover/sales by over 20%), and 32% reported aspirations to grow moderately (increase turnover/sales by up to 20%). However, the proportion of those in the region seeking to downsize or consolidate their business has risen in Q2 from Q1, from 2% to 13%.
FSB East Midlands policy representative Rav Panesar said: “The cost of doing business crisis has worsened to the point where confidence is now lower than during last year’s massively disrupted festive trading season. Business owners across the East Midlands are trying to absorb additional cost pressures but can only do so much before they’re forced to raise prices or worse close their doors.
“The small business community reduced in size to the tune of hundreds of thousands over lockdowns. Unless policymakers act fast, history is set to repeat itself. Businesses desperately need help with the charges that hit them regardless of profitability: business rates, national insurance, utilities, fuel and those linked to supply chain disruption.
“We’re now looking to local policy makers for unequivocally pro-business, pro-growth commitments – this must include UKSPF and devolution conversations, small businesses growth must be central to their design.”
