December 21, 2012 - Rachel Miller
Small firms are showing a greater level of confidence heading into the New Year compared to the same time last year, according to research from the Federation of Small Businesses (FSB).
The Small Business Index – the measure of confidence in the sector – is some 18.8 points higher than Q4 last year when the economy entered into double-dip recession. However, it has fallen by 1.1 points against Q3 to record a score of -5.6.
The index also shows that fewer small firms applied for finance in the last quarter, but of those that did, a higher proportion were accepted – 49.35% up from 42.85% in Q3. However, less than one in ten respondents still consider credit to be easily available.
Almost two thirds of respondents cited the weak domestic economy as a block to achieving their growth aspirations, so the note of optimism has come with a health warning.
John Walker, FSB national chairman, said: "There's no doubt that it is still a tough environment and the Autumn Statement highlighted that it's going to be tougher for longer. However, small firms want to get on, grow their business and invest.
Meanwhile, the Forum of Private Business (FPB) agrees that economic conditions in 2013 will be marginally better. The Forum's economics expert, Professor Philip Whyman, has warned of another tough year ahead for business with growth coming in at under 1% for the year, significantly less than growth forecasts from the CBI (1.2%) and the ONS (1.4%).
Professor Whyman said: "Given the lack of budgetary stimulus, the unwillingness of the Bank of England to engage in further quantitative easing for the time being, and the fragile state of the UK economy, I expect the UK economy to grow by less than 1% next year."
He added that much will depend on the Eurozone: "This has been another difficult year, and with every prospect that the next few years will see little marked improvement. The Eurozone crisis is also far from resolved, thereby undermining the anticipation of an export-led recovery being based on trade with our closest neighbours."