Small business’s confidence in London has plummeted, with confidence in some sectors at an all-time low.
According to a new report by the Federation of Small Businesses (FSB), London small firms’ confidence levels fell to 62.6 in the fourth quarter of 2024, down from negative 1.2 per cent points in the previous quarter.
Outside of the pandemic, this FSB report revealed that small businesses’ confidence is at its lowest recorded level.
London saw the worst drop. Confidence levels of small businesses in the wider economy stood at 40.1.
Confidence in the accommodation and food services sectors hit an all-time low of negative 111 points.
The wholesale and retail sectors followed, at negative 94.2 points, while firms in the professional, scientific, and technical activities sectors were the least pessimistic, at negative 40.1 points.
However, between the third and fourth quarters, construction saw the most significant decline in confidence, jumping from negative 26.6 points to negative 76.8 points.
Most of those quoted in the report stated that the domestic economy was “once again” the top barrier to growth.
However, the tax burden jumped to second place, with over 43 per cent of small businesses citing it as one of their top barriers.
Costs related to labour stood in third place but was a bigger issue for the UK (42 per cent) compared to London (31.5 per cent).
Consumer demand—usually second or third place in the rankings—slipped to fourth place, cited by 28 per cent of small firms.
The FSB report forecasted a ‘subdued’ growth as small businesses could “see lower levels of expansion”, with over 43 per cent saying they believe their business will grow over the next 12 months, down from over half who said the same thing in the previous survey.
Commenting on the report, Tina McKenzie, FSB’s policy chair, stated: “The fourth quarter blues reported by small firms underline how urgently the government’s growth push is needed.”
He noted: “Small firms are understandably nervous about their prospects as 2025 gets underway” and cited the upcoming Employment Rights Bill as a “major source of stress for small firms.”
A FSB report last month revealed 90 per cent of small firms were worried about the implications of the Employment Rights Bill.
McKenzie said the Spending Review, which concludes in June, “must prioritise spending on programmes that will deliver small business growth”.
He warned that “the King’s Speech later this year should include a Small Business Bill”.
“[This bill will] bring together the different strands of support and reform needed to give people dreaming of starting their entrepreneurship adventure the confidence they need to go for it, and to help people running small enterprises and in self-employment to expand and fulfil their potential,” he explained.