Small firms in Wales are closing the confidence gap with their counterparts elsewhere in the UK, according to newly published data.
The Federation of Small Businesses’ latest Wales Voice of Small Business Index shows that in the first quarter of this year, confidence among Welsh firms soared to its highest level since the index began in 2010, with confidence in Wales now only marginally lower than the UK average among FSB members.
A positive balance of 32% of Welsh small businesses who were questioned during the quarter expressed confidence about the future. That balance is only just behind the positive balance of +35.7% seen among FSB members in the UK as a whole.
The higher level of confidence among businesses in Wales is in sharp contrast to the -5% figure seen at this point in 2013. Confidence among small firms in Wales has now remained in positive territory for a full year.
The higher level of confidence is underpinned by firms reporting increasing turnover. Of those firms questioned a positive balance of 12% said they had seen revenue growth, up from +5% in the previous quarter. A positive balance of firms is also expecting revenue and profitability to increase in the coming quarter.
The figures suggest that the increasing confidence seen by small firms is translating into new investment in their businesses.
The positive balance of small businesses in Wales expecting growth in capital investment has doubled on the previous quarter to 23%. A positive balance of small firms (4%) reported increasing staffing levels over the previous 12 months. This is the second consecutive quarter that headcounts have increased, something that is expected to continue into the second quarter.
Federation of Small Businesses Welsh Policy Unit Chair Janet Jones said: “Successive surveys of our members have pointed to increasing levels of confidence among small firms here in Wales. We have seen another step-change in confidence this quarter though as our members here are now almost as confident as those in the UK as a whole.
“Last quarter we saw a balance of Welsh firms start to take on staff again. Not only has that continued in the current quarter, but we are also seeing companies now look to increase capital investment as they look to grow their businesses.
“It is clear that small firms in Wales are playing a vital role in the economic recovery, but we still have members that are finding things tough. There remain practical measures that can be taken to improve the business environment in Wales, such as reforming the business rates system and improving access to finance.”
The survey also suggests that credit conditions are improving for Welsh SMEs. During the quarter 19.2% of small firms reported that credit availability is quite or very good. This was well ahead of the 6% of firms reporting that credit was quite or very good in the first quarter of 2013.
Of those firms questioned 57.6% had aspirations to grow either moderately or rapidly in the coming 12 months, well ahead of 38.8% in the first quarter of 2013.
FSB Wales Policy Manager Dr Rachel Bowen said: “There have been concerns that that the UK recovery is too reliant on consumer spending, so it is particularly important that we are now seeing small firms begin to invest in both capital projects and new staff as they target growth.
“Small firms are vital to the recovery, and the investment that we are seeing by small businesses here should make a major contribution to a recovery that is sustainable and spread across the whole of Wales.
“However, there is no room for complacency, and policymakers need to ensure that there is a clear focus on the economy in the months to come to ensure that the business environment in Wales is supportive of our growing indigenous SMEs.”