A THIRD of Yorkshire small firms are expecting performance to worsen, as calls for a Brexit deal and an ambitious Budget are stepped up

Small firms are calling on the Government to secure a Brexit deal and come forward with radical policy interventions to arrest a dogged lack of confidence among business owners as new Federation of Small Businesses (FSB) research shows rising costs and uncertainty increasingly taking their toll.

In Yorkshire and The Humber, FSB’s SBI confidence measure for Q3 2019 stands at 20, up from -3.8 in the last quarter.

Nationally, confidence is at -8.1, down more than six points compared to the same period last year. This marks a fifth consecutive negative reading – a first in the index’s history.

Almost half (47%) of Yorkshire and The Humber business owners surveyed do not expect their performance to improve over the coming three months. One third (33%) in the region expect their performance to worsen. Nationally, 44 per cent think their performance will worsen– this figure is at a five-year high.

Small business owners continue to put investment plans on hold. In the Yorkshire and the Humber just a third (33%) are planning to invest this quarter. Nationally, the figure stands at one in four (26%) – the lowest proportion in five years. Over one in ten (16%) in the region are planning to actively decrease investment.

Those that do business internationally have been particularly hard-hit by uncertainty. Fewer that one in four (24%) report an increase in exports over the past three months, the lowest proportion in five years.

Meanwhile, fewer than one in seven (13%) small employers are planning to take on additional staff in the next three months, the lowest proportion since Q4 2017.

FSB National Chairman Mike Cherry said: “These findings must serve as an urgent wake-up call for policymakers. Even in the aftermath of the financial crash, we didn’t see such a sustained string of negative confidence readings. Three years of political uncertainty and rising costs have stifled output and left small firms unable to plan, invest and grow.

“There’s a real sense of exasperation among small firms. Big decisions – whether that be taking on new staff, purchasing machinery or embarking on sales in a new country – are being put on hold because we have no idea what our trading environment will look like in less than four weeks’ time. And what’s worse, two thirds of those that would be negatively impacted by a no-deal scenario say they can’t prepare for it.

“We need the Government to seize this final opportunity to secure a Brexit deal: one that protects free trade, enables access to the right skills and includes a transition period.

“We also need to see the Chancellor come forward with an ambitious Budget aimed at reversing the impacts of uncertainty. He must throw lifelines to the small exporters that are especially hamstrung. Direct financial assistance – such as £3,000 Brexit vouchers – to enable access to expertise and support would mark a much-needed step forward.”

The overwhelming majority (93%) of small firms say operating costs are either stable or rising – two thirds (67%) say costs have risen over the past 12 months.

The most frequently cited main causes of this increase are Labour, flagged by 40% of firms, as well as inputs (31%), utilities (29%), fuel (24%) and regulation (23%).

Mike Cherry added: “The Chancellor must compile a Budget which alleviates the impacts of rising operating costs, rather than simply adds to them. That means uprating the £3,000 discount on national insurance bills for small employers offered through the Employment Allowance and reintroducing a Statutory Sick Pay rebate.

“Support with the costs of transport – especially fuel – and business rates would also help to reinject some optimism into a small business community that’s been held back by uncertainty for years now.

“Sole traders are also crying out for support in this unpredictable climate. Now is not the time to blindly push on with IR35 changes billed for April.”