The Federation of Small Businesses in the North East is calling on the Government to help create the right environment for growth after its latest Small Business Index (SBI) revealed a notable upsurge in positivity and confidence among UK SMEs.
According to the latest research, reflecting the second quarter of 2015, growth and investment intentions have reached the highest ever levels since the index was first launched five years ago.
With few negatives in the overall picture, the FSB says the latest survey readings on job creation and productivity also bode well for small businesses bolstering the UK economy through 2015.
Among the key findings of the report were that:
nearly two thirds (65.3%) of small businesses aspire to grow moderately or rapidly in the next three months - the highest figure ever seen in the survey;
nearly one third (32%) - again the highest proportion yet recorded - plan to increase capital investment over the next 12 months;
the balance of firms that have employed new staff has risen to 8.9%, a sharp increase from the 2% reported 12 months ago; and
a balance of 24.1% of firms saw increased revenues, while 17.4% were reporting higher profits.
Wage rises within small businesses are now line with the economy overall, with an average increase of 1.9%, the greatest rise to be seen so far in the SBI.
When it comes to exporting, 28.6% are now exploring overseas markets, up from a consistent 25%, while small business confidence levels remain steady, with a score of +37.9.
This represents a significant rise on the +28.7 recorded in the first quarter of 2015 - although the figure falls slightly below the all-time high of +39.7 reported 12 months ago.
On the downside, the survey continues to suggest the South East is dominating in the economic recovery and that businesses remain concerned about the cost and availability of workers with the right skills, with 35.4% saying this was a barrier to growth.
The research also shows the chances of being approved for credit increases in line with the size of the business - 63.3% of small businesses with over 50 employees were successful compared with 45.8% of sole traders.
FSB North East regional chairman Ted Salmon said: “The results of the Q2 Small Business Index are very positive and show the major role that small businesses play in the growth of the North East and UK’s economy.
“It is critical the new Government continues to develop the right environment to support businesses planning to grow, invest and take on new staff in the next 12 months.
“In the Budget and its upcoming Enterprise Bill, Ministers should prioritise supporting small business growth, simplify business taxes, raise skills and tackle poor payment practices.”
Rob Harbron, managing economist at the Centre for Economics and Business Research, which produced the report, added: “These results give much cause for confidence and show that the UK’s small business population will be instrumental in supporting economic growth in 2015.
“Confidence is stabilising and low inflation is boosting profit growth. Strong capital investment intentions and increased worker productivity are encouraging as they play a key role in a sustainable economic growth path.”