Jennifer Thomas.
The FSB’s Jennifer Thomas reflects on its latest survey of small firms ahead of the Spending Review this month.
Published in association with
SMALL businesses are feeling the pressure as 2025 begins, with FSB’s latest Small Business Index results recording confidence at its lowest level outside of the pandemic, highlighting the growing challenges small firms are facing and the need for urgent action from the government.
Small businesses reported that for Q4 of 2024, their top barriers to growth included the domestic economy, tax burden, labour costs and consumer demand. Only 43.4% of small firms expect to grow in the next 12 months and 24.2% now anticipate contraction. The SBI confidence score dropped 40.1 points in Q4 2024, reaching its lowest point since Q1 2020, when the first lockdowns took effect.
Such a steep decline underscores the urgency of turning the government’s growth agenda into action, as outlined in the Chancellor’s recent speech. The FSB is calling for an ambitious Small Business Strategy, supported by targeted legislation, to help to reverse the trend.
The upcoming Employment Rights Bill is a major concern, with nine in ten business owners worried about its impact. This is undoubtedly contributing to the subdued confidence levels we are seeing.
On a more positive note, the government’s plans to tackle late payments – an issue that has long strained small businesses – are welcome and overdue. Improving cashflow would remove a major headache and allow firms to plan and invest with greater certainty.
Regulators have been asked to propose measures to support growth and the FSB has submitted its own recommendations to help small businesses to thrive. We urge the government to extend this mindset to HM Revenue & Customs as well, reducing the £25 billion and 280 million hours spent by small firms on tax compliance would be a significant boost to productivity.
As we approach the Spending Review, the government must prioritise initiatives that genuinely support small business growth. Looking ahead, the King’s Speech should introduce a dedicated Small Business Bill to bring together the necessary reforms and support measures. This would provide entrepreneurs with the confidence to start, scale and succeed in their businesses, fuelling long-term economic prosperity.
Jennifer Thomas is the FSB’s development manager in Northamptonshire.
……………………………….
Stay connected with Northamptonshire business through Business Times. Join our exclusive community for the latest news, insights, updates, features and thought leadership.
Stay informed – subscribe now at bit.ly/437DsSm. Unsubscribe at any time.
