Small business confidence collapses

Small business confidence collapsed by nearly 10 points from a cautiously optimistic +0.3 to a highly pessimistic -9.3 in the third quarter according to the Federation of Small Businesses (FSB) 'Voice of Small Business' Index.

The small business group immediately called for a targeted VAT cut and an extension of National Insurance Contributions (NICs) holiday scheme for small firms, as it blamed the drop on the pressure of weak demand and rising costs.

John Walker, National Chairman, Federation of Small Businesses, said: "As businesses come to terms with the double whammy of falling revenues and rising costs, it is no wonder that they're losing confidence, and unfortunately, as their overheads increase one way to control it is to lay off staff.

"It is the first time since we started the Index that we have seen more people believe that they're going to lay off staff than take them on. This has to show the Government that a more robust plan for growth is needed.

"Moreover, this is the first time that we have seen confidence in all regions of the UK in negative territory. We urge the Chancellor to look closely at our NICs holiday proposals and bring this forward in his Autumn Statement. We fear that without it, the recovery will falter once more."