Small Business Confidence Surges In The U.K. With Market Recovery In Sight

May 8, 2024

Confidence among small businesses saw a significant boost in the first quarter of the year, signalling continued momentum in the UK’s recovery from the recession.

The Federation of Small Businesses (FSB) business index, which measures confidence among small businesses, returned to positive territory for the first time in two years, with a jump of 20 points between January and March. This brought the balance of confident firms to 5.5 points, marking a notable improvement.

Most sectors experienced increased confidence, with manufacturing emerging as the most optimistic sector at 19.1 points. Although accommodation and food services ranked lowest in terms of optimism, the gap between the most and least confident sectors narrowed, indicating a positive trend across the economy.

While small businesses reported a slight decline in revenue over the first quarter compared to last year, there was a notable uptick in their ambitions for revenue growth in the next quarter.

Tina McKenzie, FSB’s policy chair, expressed relief at the return of small business confidence to positive territory, highlighting it as a good indicator that the recent shallow recession is behind us. She noted that small businesses are now focusing on expansion and anticipating better trading conditions.

The survey results precede the publication of GDP figures for March, expected to show a 0.1 per cent growth compared to the previous month. This would bring the first quarter’s growth to 0.4 per cent, marking the end of last year’s shallow recession. Economists are optimistic about the UK’s prospects for stronger economic performance compared to the previous year.

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