Confidence among small businesses fell for the first time since the EU referendum back in June 2016, according to the Federation of Small Businesses (FSB).
The latest quarterly Small Business Index dropped 5 points, down from +20 in Q1 2017 to +15 in Q2.
Operating costs for SMEs also increased sharply to 66% in Q2, up from 53% in the same period last year.
52% saw the domestic economy as a threat to expansion plans, while concerns over consumer demand (30%), labour costs (24%) and tax burdens (17%) were also raised.
- SMEs in East Midlands (+35), Wales (+31) and London (+25) had the highest confidence, while enterprises in Yorkshire (+14), the North West (+9) and Scotland (-4) were the least confident
- small firms in communication (+43) and manufacturing (+36) were the most confident in Q2, compared to those in arts (-4) and retail (-9).
Mike Cherry, national chairman at FSB, said:
“Small businesses were feeling more pessimistic even before the general election. Now alongside increasing inflationary pressure, a business rates revaluation and rising labour costs, they have a whole new wave of political uncertainty to contend with.
“For decades we’ve heard governments discuss the need to create a balanced economy. It’s time for meaningful action.
“Too many small businesses, particularly in the North, are being held back by derisory investment in infrastructure, connectivity and skills.”