Confidence among small businesses leapt higher in the first quarter of the year, in a sign that the UK’s recovery from recession continues to gather steam.
The Federation of Small Businesses (FSB business index, which measures confidence among small businesses, returned to positive territory for the first time in two years after business confidence jumped 20 points between January and March.
This brought the balance of firms feeling confident to 5.5 points. Most sectors notched an improvement, with manufacturing emerging as the most confident sector at 19.1 points.
Although accommodation and food services scored lowest in terms of optimism, the gap between the most confident sector and the least was “notably narrower…showing a gentle rising tide across the economy”.
The only major sector to see a decline in its confidence score between quarters was information and communication, although it still remained in positive territory.
The increase in confidence came even as small businesses reported that revenue declined slightly over the first quarter compared to last year. However, the survey noted that the same businesses reported “accelerating ambitions” for revenue growth in the next quarter.
“Having small business confidence back in positive territory in the opening months of 2024 is a relief, after two years of it being underwater, and following on from a particularly difficult end to last year,” Tina McKenzie, FSB’s policy chair said.
“The rebound in confidence levels in most sectors is a good indicator that the shallow recession recorded at the end of 2023 is firmly in the past, and small businesses are keen to look ahead to expansion and better trading conditions,” she continued.
The survey comes ahead of Friday’s publication of GDP figures for March, which are expected to show that the UK grew 0.1 per cent on the month before.
This would mean the UK grew 0.4 per cent in the first quarter, bringing last year’s shallow recession to an end. Economists are hopeful that the UK can put in a better showing than last year, when the economy barely expanded at all.