More than seven in 10 small businesses have held back on investment while Brexit uncertainty continues to loom overhead, a new study has revealed.
The finding forms part of the Federation of Small Businesses’ (FSB) latest report into UK productivity.
According to the data, small firms are “struggling to expand, hire and raise productivity” as a direct result of political and Brexit uncertainty.
In total, 72 per cent of small businesses are “not planning” to increase capital investment into their businesses over the next three months – the highest on record since the first three months of 2017.
It means that business investment has fallen for straight quarters for the first time since the 2008 financial crisis.
Recruitment is also seen as a key barrier to growth. The survey shows that more than one in three (35 per cent) small business owners struggle to access appropriately skilled staff. This is the biggest proportion since Q3 (July to August) 2015.
In fact, the net balance of small businesses increasing the size of their workforce has actually fallen into negative territory, at minus two per cent – meaning more businesses are decreasing in terms of staff size than increasing.
The FSB attributes this to EU net migration plummeting from 189,000 to 74,000 in the 12 months to December 2018. Around one in five small businesses rely on EU staff to operate effectively.
Commenting on the figures, FSB National Chairman Mike Cherry is now calling on the Government to “spell out their plans for supporting small firms and securing a pro-business Brexit”.
“It’s impossible for small business owners to invest for the future when we don’t know what the future holds,” he said.
“Lifting productivity among the smaller firms that make-up 99 per cent of our business community is a must. But until we have the political certainty that enables us to take risks and innovate, achieving that goal will remain elusive.”
Mr Cherry added: “A tight labour market and falling migration don’t help matters. It’s becoming harder and harder to find the right people to fill vacancies. With that in mind, we welcome the announcement of a Migration Advisory Committee review of future salary thresholds for those looking to make the UK their home.”