Small business confidence tumbles on swelling costs and weaker demand

Intensifying cost pressures and a slowdown in consumer spending as a result of cost of living crunch squeezing Brits has led to a collapse in confidence among small firms, a new survey out today shows.

Net confidence plummeted to minus 35.9 in the three months to October, down by 11.2 points over the last quarter, according to the Federation of Small Businesses (FSB).

The FSB said more and more firms are relying on debt to generate cashflow.

The government’s botched mini-budget is likely to have heaped pressure on SMEs finances due to it leading to a steep rise in interest rates by rocking the gilt market.

Over four in 10 small companies have suffered a drop in revenues. Around a third reported a jump in income.

“Recent political and economic turmoil hasn’t helped, which is why it is vital the Government focuses on stability,” Martin McTague, national chair of the FSB, said.

New chancellor Jeremy Hunt earlier this week confirmed the 1.25 percentage point national insurance rise would still be scrapped despite him ditching almost all of prime minister Liz Truss’s mini-budget. Business energy bill support has been retained.

“That money must be in the pockets of small firms by next month, no ifs, no buts, followed by clarity on what will happen after the initial six-month period,” McTague added.

Workers on course for record pay rise next year

Workers are in line to receive the biggest average annual pay rise on record next year, a closely watched survey out today reveals.

Employers are set to raise pay by five per cent on average in 2023, according to HR data provider XpertHR.

Not only are staff on course to see their pay packets swell, nearly all of the workforce are going to bag a pay rise. 

XpertHR’s survey of businesses employing 1.1m found 91 per cent of those employees will receive a raise.

Sheila Attwood, XpertHR pay and benefits editor, said: “Should pay awards reach the median five per cent set out in our forecast they will sit at a level XpertHR has not recorded since 1992.”

The figures will help boost worker confidence after it has been battered by their pay being wiped out by historic inflation, which is running at a 40-year high of 9.9 per cent.

Nearly 90 per cent of businesses expect to hike pay to help their staff with rising living costs.

Separate data published by the Recruitment and Employment Confederation shows companies are still keen to hire workers despite the UK economy likely to enter a drawn out recession this winter.