Insurance · 13 April 2017

Rising exports fuel small business confidence

Over 30 per cent of smaller firms expect overseas sales to grow in the next three months
Over 30 per cent of smaller firms expect overseas sales to grow in the next three months

A rise in exports in the first three months of 2017 has contributed to the highest level of small business confidence in over a year, research has shown.

A net balance of 15.6 per cent of the UK’s small firms reported an increase in export activity between January and April, with a net balance of 30.5 per cent expecting international sales to grow in the next three months.

As a result, the Small Business Index (SBI) – a measurement of small UK business confidence, conducted quarterly by the Federation of Small Businesses’ (FSB) – now stands at 20.0, the highest figure since 2015.

Commenting on export figures, which are the highest for small firms since the SBI began, FSB national chairman, Mike Cherry, said: “It’s encouraging to see small businesses trading more overseas and driving an exports-led recovery.

“We know small firms that export have higher turnovers than those who rely on the domestic market, so it’s crucial that the government maximises cross-border trade opportunities.”

According to the FSB, confidence amongst small businesses is up considerably since the EU referendum in June last year, when the SBI slipped to -2.9.

The recovery comes despite escalating business costs. Some 64.5 per cent of small firms reported an increase in operating costs so far in 2017 – the biggest hike seen since mid-2013.

Fuel and labour costs continued to hamper small businesses – cited as the main cause of total cost increases by 36.8 per cent and 26.9 per cent of owners respectively.

In addition, exchange rate costs became more significant to smaller companies in 2017, with 26.9 per cent of owners highlighting it as having a growing impact on operations.

This year, small UK businesses are also likely to face increased employment costs, with this month’s introduction of the National Living Wage (NLW) and subsequent national insurance and auto-enrolment contributions. For the average small business owner, employment costs could rise by £2,600 in 2017, according to the FSB.

Cherry added: “The impacts of the spiralling cost of doing business are starting to show. The percentage of businesses seeking to grow in the next 12 months, although slightly up on last quarter, remains below the levels seen two or three years ago. Higher numbers of businesses also report they plan to downsize or close over the next year.”

MPs have encouraged small business exporting ahead of formal Brexit talks

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

Q&A

If you’ve found the article above useful, but have a more detailed and bespoke question, then please feel free to submit a query to our expert. We at Business Advice will get in contact with them on your behalf and arrange for a personalised response. These questions and answers will then be collated on the site for any other readers who have similar queries.

Ask a question

On the up

Find out how KPMG Small Business Accounting can really work for you

FIND OUT MORE