CONFIDENCE in small businesses in the South East has crashed below the national average, to levels not seen since the 2020 winter lockdown.
In its South East Small Business Index, the Federation of Small Businesses (FSB) found that confidence had dropped from a rating of 9 in the first quarter of 2022 to minus 32 in Q2.
Business confidence in the South East was below even the national average, which was at minus 25.
Over the last quarter, 40 per cent of businesses reported a decrease in revenue with only a third reporting an increase.
Employment levels were also discouraging, with 14 per cent of businesses reporting a decrease in staff and only 9 per cent reporting an increase.
However, three-quarters of small and medium-sized enterprises (SME) have made no change to staffing levels, with just 16 per cent planning to increase their workforce.
Wage growth is showing some positive signs, but this may not be the case if inflation rises above current levels.
Almost two-thirds of SMEs reported an increase in staff wages, with 58 per cent increasing by 2 per cent or more. Only 6 per cent reported a decrease in staff pay. Similar numbers expect to see wages increase and by 2 per cent or more in the coming year.
Just under half of SMEs in the South East plan to grow in the next 12 months, with only 14 per cent planning to downsize, close or sell.
Linda Garcia, FSB policy representative for the South East, said: “The South East economy is in terrible difficulty. Our SMEs are resilient, but the tipping point is fast approaching.
“Crippling energy prices, high taxes, soaring inflation and disappearing consumer and business confidence make an appalling greeting card for a new Prime Minister.
“We hope action will be taken soon on energy prices and taxation to restore business and consumer confidence and do whatever it takes to avert recession.”