Small businesses in negative mood for first time in four years

Small retailers Image copyright Getty Images

More small and medium-sized businesses are pessimistic about the future than positive for the first time in four years, according to an industry body.

Small business' concerns are growing that the domestic economy will weaken.

The first survey by the Federation of Small Businesses (FSB) since the Brexit vote suggests the second largest fall in confidence in the index's history.

It is the third quarter in a row that confidence has fallen.

"The political shock of the Brexit result has taken place at a time of weakening business confidence," said FSB national chairman Mike Cherry.

The FSB surveyed 1,035 small firms between July and August.

The results suggested business confidence fell into negative territory for the first time since 2012, with pessimistic business owners outnumbering confident ones.

Image caption We Clean Any House of Southend is worried about recruitment as European people are less sure of their status here

Wake-up call

Wilson Boardman of Micromix Plant Health in Nottingham told the BBC he was positive about the future: "We will get out from under the regulatory heel of Brussels. I'm not worried we're not going to be part of the single market. We should have a deal like South Korea they don't have to take any migrants from the EU."

But Glyn Shemwell, who runs cleaning business We Clean Any House in Southend, said Brexit was already having a direct and negative impact on his business: "The main concern for us is certainly Brexit. We reply a lot on migrant workers although we don't actively recruit. They're concerned now as they don't know if they'll be allowed to work here."

The FSB said there were "many positive signs" of small businesses proving resilient, in spite of a fragile economic outlook in the longer term because of Brexit political uncertainty.

Image caption Wilson Boardman who runs a business in Nottingham said he wasn't worried about Brexit

The number of small companies aspiring to grow over the year climbed to 55%, the highest level since the end of 2015.

Meanwhile, the number of firms expecting to downsize, close or hand on the business fell to 11%.

"Small firms are resilient and will survive the current fragile economic outlook, but to avoid an economic slowdown this data should be a wake-up call for our elected politicians," said Mr Cherry.

He added: "We look to the party conferences and upcoming Autumn Statement to green-light infrastructure projects at local and national level, to simplify the tax system and to help reduce the costs of doing business."

Last month, a survey by the CBI business lobby group said that small and medium-sized manufacturers fear they will be hit by a fall in orders in the next quarter.

It indicated that business optimism had fallen at its fastest rate since January 2009, driven by the uncertainty following June's Brexit vote.

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