Small business growth hits five year high

FSB's small business index finds that two thirds of small firms plan to grow moderately or rapidly over coming year

Growth and investment intentions in small businesses have hit their highest levels in five years, according to The Federation of Small Businesses’ (FSB) latest Small Business Index (SBI).

The report revealed a significant increase in positivity and confidence among Britain’s small and medium-sized enterprises and follows data published by the Enterprise Research Centre which indicated that small businesses are growing at the fastest rate since 2008.

Nearly two thirds (65.3%) of small firms surveyed in the SBI said they aspire to grow moderately or rapidly in the next three months, while 32% plan to increase capital investment over the next 12 months – the highest figures yet recorded for this survey.

The number of companies employing new staff has also risen from 2% to 8.9% in 12 months, with 24.1% of firms witnessing increased revenues and 17.4% reporting higher profits.

Additionally, the amount of of small businesses exporting overseas has increased from 25% to 28.6%, while small business confidence levels have remained at a steady +37.9. This is an increase from the +28.7 recorded in the first quarter of 2015, though this falls below the all time high of +39.7 a year ago.

Negatively, figures still indicate that the South East is ahead of the rest of the country when it comes to economic recovery and many businesses said that the cost and availability of skilled workers was a barrier to growth.

Rob Harbron, managing economist at the Centre for Economics and Business Research, which produced the report, said: “These results give much cause for confidence and show that the UK’s small business population will be instrumental in supporting economic growth in 2015.

“Confidence is stabilising and low inflation is boosting profit growth. Strong capital investment intentions and increased worker productivity are encouraging as they play a key role in a sustainable economic growth path.”

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