Three in five small companies expect to grow their business in 2015, research finds.
While companies are less confident than in previous quarters, they still expect to hire more staff, increase exports and grow their businesses in the first quarter of 201, according to a study by the Federation of Small Businesses (FSB).
The news follows a similarly positive report last week that revealed the growth ambition of the UK’s small companies.
Small firms’ productivity grew year-on-year in the second half of 2014, rising by 1.1 per cent in the fourth quarter of the year, the FSB finds.
This is an encouraging sign for the both economy as a whole and workers in particular, says the organisation, as wage growth is typically linked to productivity increases.
FSB national chairman John Allan says, ‘All the signs show that as we head into the new year small businesses are expecting to grow and take on new staff. But to achieve these positive ambitions small firms will need certainty in the domestic economy including interest rates.’
The importance of continued government support thorough schemes such as Funding for Lending is vital, with nearly a quarter of businesses (22 per cent) reporting the cost of finance as a barrier to growth, compared to 10 per cent a year ago.
The situation is most acute for the smallest firms. Only 11 per cent of small businesses without employees report that they find new credit affordable, compared to 44 per cent of those with 51 or more staff.
Allan continues, ‘There are signs that more support could be needed. The perception of increasing cost of finance, and further warnings of a downturn on the continent, demonstrate that ministers need to continue to do all they can to support small firms.
‘Building on extensions to schemes like Funding for Lending, the Employment Allowance, and recently improved business support programmes are crucial to this.’
Nearly a fifth (16 per cent) of small businesses hired more staff in the last quarter of the year while only one in 10 (11 per cent) reduced numbers in Q4 2014.
Confidence is greatest in the IT sector, while it rose fastest in health and social work and transport.