Small business confidence has fallen to -9.9, the lowest level since the wake of the financial crash in 2011, according to the latest Federation of Small Businesses (FSB) Small Business Index.
The data revealed that 67% of small firms do not expect their performance to improve this quarter.
The index revealed that 58% of businesses say the domestic economy is a significant barrier to growth, up from 55% at this time last year.
Access to appropriately skilled staff (36%), lack of consumer demand (29%) and labour costs (21%) are also frequently flagged as primary barriers to growth.
Small businesses in the accommodation and food services (-48%), retail (-44%) and manufacturing (-16%) sectors report some of the lowest index readings.
FSB national chairman, Mike Cherry, said: “How have politicians allowed it to come to this? Two and half years on from the Brexit vote and small businesses are looking ahead to Brexit day with no idea of what environment they’ll be faced with in less than ten weeks’ time.
“The current uncertainty is making it impossible for firms to plan, hire and invest. That’s feeding into wider concern about the economy at large. We won’t see GDP growth pick-up again until there’s some certainty about how the business environment will change in the coming months.
“Come the beginning of April, small firms will not only have Brexit day to worry about but also Making Tax Digital, a higher living wage, rising auto-enrolment contributions and further business rates hikes. This will be a flashpoint for a lot of businesses, threatening the futures of many.”
The index also shows borrowing costs for small businesses soaring. The proportion of successful credit applicants being offered a borrowing rate of 5% or more has hit a record-high (74%).
The proportion of small firms applying for external finance remains low at 13%.
Cherry added: “With Brexit taking up all of the government’s bandwidth there are a huge number of domestic business issues that are not being addressed. They include the long-standing barriers small firms face when trying to access new finance, and the sky-high borrowing rates they’re often offered if an application is successful.
“This is another issue that will be exacerbated by a chaotic no-deal Brexit. When times are tough, big lenders often put supporting small businesses on hold.”
Source: Talking Retail