Confidence among UK small businesses has tumbled as bosses fret about the health of the economy, the tax burden and rising wages.
The Small Business Index (SBI) calculated by the FederationofSmallBusiness shows that optimism slumped at the end of last year. The SBI hit its lowest recorded point outside the Covid-19 pandemic in the Oct-Dec quarter, dropping from -24.4 points in Q3 to -64.5 points in Q4.
The survey covers the period when firms were awaiting, and then digesting, Rachel Reeves’s budget at the end of October which included increases to employers national insurance contributions (NICs).
The FSB reports that accommodation and food services was the least optimistic major sector, followed by the wholesale and retail sector. Construction recorded the largest fall in confidence, from -26.6 points to -76.8 points.
Tina McKenzie, FSB’s policy chair, says small businesses are worried: “Small firms are understandably nervous about their prospects as 2025 gets underway. "The upcoming employment rghts bill is a major source of stress for small firms, with nine in 10 business owners saying they are concerned about its introduction, and this is undoubtedly a major cause of the very subdued confidence levels seen in our research."
A surbey from the Chartered Institute of Personnel and Development (CIPD), also makes for grim reading. It found UK employers preparing the biggest redundancy round in a decade – with those budget tax rises being blamed. The CIPD survey, carried out in January, found most employers cited the rise in Nics and a 6.7% increase in the “national living wage”.
Over in Beijing, Chinese President Xi Jinping has held a rare meeting with some of the country’s top business leaders. Xi spoke at a symposium attended by business leaders including from Huawei,Xiaomi, BYD, Unitree and CATL.
Intriguingly, Alibaba co-founder JackMa was also there, state media reported. Ma has been keeping a low profile since Xi’s government forced Alibaba to drop the stock market flotation of its AntGroup, after Ma criticised Chinese regulators.
That spat was the start of a campaign to tighten state control over private firms in the world’s second-largest economy. Today’s meeting may be a sign that Xi’s administration is gearing up to work more closely with China’s major companies as it tries to cushion the economy from the impact of a trade war with the US.
ChristopherBeddor, deputy China research director at GavekalDragonomics in Hong Kong, said: “It’s a tacit acknowledgement that the Chinese government needs private sector firms for its tech rivalry with the US. The government has no choice but to support them if it wants to compete with the US.”
In breaking news ... Bloomberg is reporting that China’s fast fashion retailer Shein is under pressure to cut its valuation to about $30bn, ahead of a float on the London stock market.
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