Latest survey results from the Federation of Small Businesses (FSB) reveal record confidence levels among UK small businesses. The Small Business Index – the FSB’s measure of confidence – reached +41 points in the third quarter. It is the first time the sentiment has reached this level with every sector recording a positive outlook for the upcoming three months.

Three fifths of the small businesses surveyed (61%) are expecting to grow in the next 12 months. One in 10 (11%) expects to grow rapidly. These results make it the seventh consecutive quarter that small businesses have been positive about their outlook, again underlining the pivotal role small businesses have played in the economic recovery.

Regionally, the North East is showing the greatest gains compared to a year ago, recording a confidence score of +44, compared to -7 in Q3 2013. The South East remains the most confident region overall, registering a score of +52.

Small firms also report good news on turnover, profits and job creation. One third (33%) of businesses surveyed expect their turnover to grow in the next quarter and almost a fifth (17%) expect profits to rise. The most confident sector remains financial services (+62), while most improvement was witnessed in health and social work, and in the hospitality industry. Job creation is robust too, with small firms’ hiring intentions at an all-time high. A net balance (+5%) of small businesses increased headcounts this quarter, a trend that looks set to continue in the next quarter.

The FSB underlined that this buoyant confidence seen in small businesses depends on pro-enterprise policies that will enable small businesses to grow, create jobs and pay their staff more. The latest results show that barriers to these growth aspirations do still exist. Weak consumer demand, the domestic economy and growing skills shortages especially in growth sectors such as IT are key issues that must be addressed.

The FSB wants political parties to spell out how they will continue to support the small business community in driving the economic recovery – especially as we head into party conference season. Small firms want to see measures which will bring the costs of doing business down and enhance their ability to create jobs for the UK economy.

Key findings show:

  • The Small Business Index rose to +41, breaking the previous record of +39.7 recorded in Q2 2014.
  • A third (33%) of small firms expect their turnover to rise and 17 per cent expect profits to grow over the next three months.
  • A net balance of five per cent of small firms increased headcounts in Q3 2014 – the highest increase on record.
  • A net balance of seven per cent of firms expect to increase staff levels in Q4 2014, pointing to further jobs growth in the future.
  • Confidence rose fastest in health and social work, bars and restaurants, and personal services sectors. Financial services remains the most confident sector overall.
  • 61 per cent of firms expect to grow in the next 12 months

John Allan, National Chairman, Federation of Small Businesses, said: “We’re seeing record breaking confidence from our members which suggests small firms will continue to spearhead the UK’s recovery. We want policy makers to lock in this optimism and continue to back the self employed and small businesses. As we head in to party conference season, we’ll be looking to all the political parties to spell out what they will do to encourage job creation, investment and reward entrepreneurs in the next Parliament.”