Two thirds of small businesses in the South West have cited the general state of the economy as the biggest barrier for growth for 2024 according to a new regional report.

The Federation of Small Businesses (FSB)'s quarterly confidence survey for the final three months of 2023 shows that levels of positivity have continued to fall among the region's SMEs with the state of the economy, labour costs and the lack of available staff highlighted as the three biggest challenges they face.

The report – taken among small business owners and sole traders between 13 December 2023 and 2 January 2024 – shows the South West lagging well behind every other area in the country in terms of SME confidence and also reveals that one in five of those surveyed say they may have to decrease headcount in the current quarter.

There was some consolation in that the South West figures are still well ahead of the same time last year – when regional confidence hit a record low figure – but the general tone of the latest quarterly snapshot of SME confidence is described as 'worrying' by FSB's South West policy representative.

"These figures paint a depressingly familiar picture here in the South West," said regional policy rep Craig Carey-Clinch.

"The reality is when confidence is low it affects every aspect of business thinking.

"When businesses lack confidence they take less risks, are less inclined to take staff on and can put growth plans firmly on hold. And none of that is good for the economy as a whole. It is a worrying report."  

 The regional figures were released as part of the quarterly FSB confidence report for England which showed a similar downward trend in small business confidence elsewhere – albeit not quite as marked as in the South West

Tina McKenzie, FSB's Policy Chair, said: "Small firms are ever the economy's canary in the coalmine, more exposed to shifts in consumer behaviour and changing circumstances due to their lower levels of reserves to fall back on. With many fighting hard to keep going amid challenging circumstances, their ingenuity, grit, and tenacity are being tested to the limit."

The FSB South West report can be downloaded at http://tinyurl.com/3kwtbpfz