Increased exporting has led to a rise in small business confidence, but the need for focus on the current domestic situation to boost local economic stability and growth remains a priority, according to Northern Ireland’s largest business organisation.
Today, the Federation of Small Businesses (FSB) published its latest quarterly Small Business Index (SBI) which revealed a rise in export activity (15.6%) across the UK over the last three months, and a net balance of SMEs expecting to increase their international sales over the next quarter.
Responding to the figures, Wilfred Mitchell, FSB Northern Ireland Policy Chair said: “It’s encouraging to see local small businesses trading more overseas, driving an export-led recovery. FSB research confirms that small firms that export have higher turnovers than those who rely on the domestic market, so it’s crucial that the Government maximises cross-border trade opportunities for SMEs and, in particular, resolves uncertainties around the post-Brexit border between Northern Ireland and the Republic.
Mr Mitchell warned: Our latest Brexit research finds that over a quarter of FSB exporters would be deterred from trading with the EU27 by a tariff of any size. We cannot rely in the long-term on the boost that exporters have received from a weak pound. To maintain export growth, we need to focus on opening up new international markets and getting more small firms exporting. That includes negotiating an ambitious free trade agreement (FTA) with the EU as part of the Brexit process”.
The recovery in the headline SBI comes despite a surge in the cost of doing business. A net balance of 64.5% of small firms reported an increase in operating costs over the past quarter, the highest proportion since the summer of 2013. Fuel (36.8%) and labour (35.9%) are cited most often as the main causes of this increase, with the exchange rate (26.9%) also frequently flagged.
Mr Mitchell concluded: “Confidence is fragile and, at a time of unprecedented political and economic uncertainty, both locally and nationally, small firms are being hit from all sides by mounting cost pressures including a hike in the National Living Wage (NLW) this month as well as an increase in the cost of fuel. Consequently, the percentage of businesses seeking to grow in the next 12 months, although slightly up on last quarter, remains below the levels seen in recent years. Our local politicians need to focus on getting the Executive working again so that business confidence and economic activity do not slump again.”
