Productivity slump shows strain of uncertainty on small firms

FSB
Mike Cherry of the FSB

UK productivity growth has decreased for the third consecutive quarter. Responding to the news Federation of Small Businesses (FSB) National Chairman Mike Cherry said:

“The data from today’s productivity figures clearly illustrates what the ongoing uncertainty means for all businesses and the wider economy.

“At the moment, more than eight in ten small firms say they have either maintained or increased their headcounts over the past quarter, however seven in ten are not planning to increase investment.

“This unwillingness to invest is partly down to the ongoing uncertainty which is looming large for all businesses. The political uncertainty is not only dragging down confidence, but is now also a drag on the UK’s productivity.

“There are also deeper structural issues that need to be addressed to resolve the productivity puzzle, including supporting small firms to adopt new management practices, business models and digital technologies that can increase their efficiency.

“Less than half of small businesses have used cloud services (40%), online data storage or back up (37%) and file transfer technology (33%).

“The negotiations surrounding the UK’s exit from the EU have dragged on for so long, small businesses are crying out for clarity.

“Enough is enough – we need to see the ongoing cross party talks leading somewhere. They cannot be for nothing. The only way we are going to secure a business-friendly withdrawal from the EU and end Britain’s productivity malaise, is if all parties show a willingness to work together to achieve this.

“Government must focus on the key long term issue of increasing small business productivity with initiatives like BEIS’s Business Basics fund which are a step in the right direction.

“But we need to see workable, scalable interventions introduced too. The upcoming Spending Review is a key moment for reinforcing the Government’s commitment to provide small firms with the support they need.”