'Confidence improves' among the UK's smaller employers

The confidence of small companies has grown but their intentions to invest have declined as the economic situation and accessibility to funds prove to be an obstacle to growth, research from the opening quarter of 2013 shows.

The Federation of Small Businesses (FSB) report polled 2,686 people in quarter one of 2013 and found a heartening rise in sentiment, with confidence increasing to a level of +6.3%.

Nonetheless, this higher confidence was offset by small firms' reduced expectations for growth in 2013, with 54% forecasting growth, down from the 56% that forecast this in the first quarter of 2012.

Companies pointed to concerns about the UK economy and consumer demand, as well as constraints on access to finance, as the chief obstacles to growth.

The FSB finds it worrying that a smaller number of companies have gone to the banks to seek finance and it says the upcoming Budget must address this issue.

"It is great news that confidence is beginning to edge up and is back in positive territory," John Walker, the national chairman of the FSB, said.

He added: "This bodes well for GDP figures for Q1 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 found that small firms anticipate creating new jobs, increasing slightly their employee numbers in the coming quarter.

It noted that the most optimistic firms are financial and business services. In contrast, retailers and manufacturers expect the business environment to worsen for them.

The North East recorded the biggest yearly jump in confidence. It was one of eight regions to see an annual increase in confidence. Small firms in the southern regions are maintaining good levels of optimism, meanwhile.

The FSB added that the biggest forces persistently pushing up business costs in the quarter were fuel (56%) and utilities (51%).

Copyright Press Association 2013