Business confidence shared by small companies has continued improving over the east quarter. Sixty per cent of companies surveyed by the Federation of Small Businesses (FSB) expect further growth during the next year. All industrial and activity sectors reported a positive attitude for the seventh consecutive quarter, meaning that a more positive and optimistic outlook has now been shared by many businesses for almost two years.
The ONS (Office for National Statistics) reported 3.2 per cent growth in the second quarter of 2014, measured on a year-on-year basis. Optimistic IMF (International Monetary Fund) pronouncements to the OECD (Organisation for Economic Co-operation and Development) which monitors economic progress in over thirty-four countries state that the U.K. will probably continue as the fastest-growing Western economy, for the short term at least.
Improving areas of the economy include the health sector, social work and the hospitality industry. The sector displaying most business confidence was financial services. Analysed on a geographical basis, northeast England has seen the most marked improvement in attitude, whereas the highest scoring area for general business confidence remains south-eastern England.
A third of businesses are currently expecting turnover to increase and a fifth are expecting an all-important rise in profits. Even more optimistic was the reported survey result that eleven per cent of companies expect to grow quite rapidly. On the employment and recruitment front, a net balance of five per cent of firms has also increased staff headcount over recent months.
The FSB chairperson, John Allen, called for government policy-makers to back the self-employed and small businesses. In addition, he wanted the main political parties to detail their policies over the coming conference period, relating to the economy and business – especially investment, taxation, rewards and job creation.
A number of possible future challenges and barriers to hopes for business growth still exist. These include weak consumer demand, skills shortages (particularly in the field of information technology) and a combination of geo-political events. These concerns include the Russian military presence in the Ukraine and consequent sanctions with possible retaliation leading to a ‘tit for tat’ trade war, the so-called Islamic state with its religious fundamentalism and consequences, along with a possible impending slow-down in China. In the UK, the recent Scottish referendum result has now in effect removed the question of that country’s possible independence (for a generation or a lifetime, according to commentators), thus leading to a feeling of greater national business confidence.
Click here for the the full FSB report, which contains a wealth of interesting information and intuitive graphics which can be readily analysed and understood. The report is based on research carried out during August 2014, based on 2,137 responses received from an online survey. Interestingly, the report mentions that this year fewer businesses report applying for credit (15 per cent of small firms, down from 22 per cent this time last year). Some analysts are interpreting this as a positive indication, representing greater liquidity or improved cash flow.