The latest Q2 2020 Small Business Index has been published by the Federation of Small Businesses (FSB), providing a snapshot of confidence among small businesses and sole traders nationwide.
More than two-fifths (42%) of the 1,400 entrepreneurs surveyed said that they anticipate a relative improvement in the performance of their businesses as lockdown restrictions ease.
Meanwhile 13% confirmed that their prospects for Q3 2020 were “much improved” on previous quarters.
The key takeaway from the FSB’s latest index is that small businesses are experiencing polarised fortunes in various sectors nationwide.
Almost a quarter (23%) of entrepreneurs warned they anticipate their revenues to be “much worse” in Q3 than the previous quarter.
One encouraging statistic is that fewer businesses are citing the coronavirus crisis as having a negative impact on their overall trading confidence. In Q2, 75% small firms blamed the COVID-19 pandemic compared with 88% during the height of the lockdown in Q1 2020.
The sectors feeling the most confident of an uplift in revenue ahead of Q3 2020 are the construction (29%) and accommodation and food service (26%) industries.
Meanwhile the wholesale and retail (13%) and arts and entertainment (2%) sectors are the least confident of a prompt turnaround in the third quarter.
The vast majority (82%) of all small businesses still admit to operating below capacity, with only 4% of small firms actively recruiting in the last three months – a record low for the index.
Mike Cherry, National Chairman, FSB, said: “Given so many small firms are already being forced to reduce headcounts, policymakers will need to keep existing interventions under close and continuous review to ensure they are sufficient.
“They should also be conscious that tax increases for small businesses and the self-employed would risk stifling any nascent recovery.”
Adam Marshall, Director General, the British Chambers of Commerce (BCC), believes these latest figures confirm that the UK’s economic recovery remains “very much in first gear”.
“Businesses are grappling with reduced customer demand, an ongoing cash crunch, and the potential for further lockdowns during an uncertain autumn and winter ahead,” added Marshall.
“The time has come for the Government to take radical steps to slash the tax burden around employment to help companies pay valued staff, rather than the Revenue.
“A major boost to the Employment Allowance and an increase in the threshold for employers’ National Insurance contributions should both be in the Chancellor’s sights if he wants to help viable companies save jobs as the furlough scheme comes to an end.”