Most small firms plan to grow over the coming year but are concerned by struggles to recruit, increasing costs and a lack of access to finance, a new report says.
The Small Business Index compiled by the Federation of Small Businesses (FSB) found that just over half (54%) of the 1,200 businesses surveyed expect to grow over the next year, higher than the last survey the organisation carried out before pandemic.
Job creation numbers are also at their highest in a number of years, but more than three-quarters of firms (78%) said their costs were rising and 40% said that profits were being hit by inflationary pressures.
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In addition, fewer than one in 10 firms applied for finance in the last quarter, the lowest level for seven years, while only 45% of those that did apply had bids for funding approved, another long-time low.
Those factors led to UK small business confidence being marked at -8.5 in the last quarter of 2021, a 12-month low.
FSB chairman Mike Cherry said: “After two years of turmoil, in which firms have once again shown their adaptability and resilience, the small business community stands ready to spur our economic recovery. The majority intend to grow over the coming 12 months, and many are looking to increase headcounts.
“Their optimism is, however, hampered by spiralling inflation, labour shortages and looming tax grabs. Come April, they’ll be faced with a jobs tax hike, an increase in dividend taxation and fresh business rates bills.
“We urgently need the Government to start looking closely at the policies that will empower the small business community to spur our recovery from this recession as it did the last. The growth intentions are there, but we need the right support to turn vision into reality.
“The bounce back loan initiative was a real success, but it can’t be thought of as job done. New enterprises are launched everyday across the UK, never more so than at times like this when the economy is changing apace. Our start-ups need funding to go on and be the employers and innovators of tomorrow.”
