FSB: Confidence among small firms has improved

Confidence among small firms heading into 2013 is higher than it was a year ago, the Federation of Small Businesses (FSB) has discovered.

Employment opportunities with these firms could improve after it was announced that the Small Business Index's - which measures confidence among small businesses - score of -5.6 is 18.8 points higher than the fourth quarter score of 2011 and only 1.1 points lower than this year's third quarter score.

The score gauges optimism within the small business sector, and is often a good sign of how GDP figures will fare. This is welcome news especially as some forecasts expect growth to be slow next year.

The FSB went on to reveal that although fewer firms applied for loans in the fourth quarter than a year earlier, a higher percentage of those that did had their applications approved.

Some 49.3% of loan applications were given the green light in the last three months of the year compared to just 42.8% between July and September.

That said, only one in ten businesses feel they have easy access to credit, which has prompted the FSB to call for greater competition in the sector and for more alternative sources of finance.

This is key as a third of small businesses declared that investment would be a priority over the next 12 months.

The FSB hopes that more firms will take this view in 2013 because of the increase in capital allowances to the tune of 250,000 announced in the Autumn Statement.

John Walker, FSB national chairman, said: "This quarter's report shows cautious optimism from the UK's small firms. There's no doubt that it is still a tough environment and the Autumn Statement highlighted that it's going to be tougher for longer. However, small firms want to get on, grow their business and invest.

"We urged the Chancellor to put small firms at the heart of the Autumn Statement and many of his plans will help - especially raising the tax free investment limits.

"However, there is still more to do - especially around accessing finance. While more small firms have been accepted this quarter, it is clear from our research that others continue to struggle."

Copyright Press Association 2012