More confidence, less investment says FSB

CONFIDENCE levels among small businesses has increased but their investment intentions have fallen as the domestic economy and access to finance act as a barrier to growth, a new survey reveals.

The Federation of Small Businesses’ first economic report of the year showed a rise in confidence, moving from a negative reading of -5.6 in last year’s final quarter to +6.3 in the first quarter of 2013.

However, this optimism was tempered with caution as fewer businesses expect to grow this year – down from 56% in Q1 2012 to 54% in 2013.

Firms cite the domestic economy, consumer demand and access to finance as the main barriers to achieving growth. There was a fall in the number of firms approaching the banks for finance, the report found.

Gordon Millward, FSB regional chairman, said: “It is great news that confidence is beginning to edge up and is back in positive territory. This bodes well for GDP figures for quarter one and we would expect them to be better than the -0.3% recorded in Q4 2012.

“However, we know that inflationary pressures are likely to persist in 2013, especially through rising energy bills and fuel costs and this will affect disposable incomes.”

The report also suggests that small businesses expect to marginally increase their staffing levels over the coming three months.

Financial and business services firms remain the most optimistic about the business environment, while retailers and manufacturers expect conditions to deteriorate, the report said.