Two surveys of business confidence published on Friday showed differing outlooks for different sizes of company.

Lloyds Bank’s Business in Britain report showed stable if downbeat results, with its business confidence index holding more or less steady at 23% in December, from July’s score of 24%. A separate survey focusing just on small business paints a gloomier picture though. The Federation of Small Businesses (FSB) Small Business Index (SBI) for q4 of 2017 fell for the third quarter in a row to -2.5, down from 1.1 in Q3 and a high of 20.0 in Q1.

The Lloyds survey also confirms the skills gap that Britain’s economy faces, with 46% of responding firms reporting difficulty finding suitably skilled people to fill vacancies. Many firms and bodies including the CBI have expressed concerns that Brexit could exacerbate the shortage by removing access to European workers, and concerns over the impact of Brexit were prominent, with 48% of firms expressing them.

Among the most common risk factors expressed by firms were economic (22%) or political (13%) uncertainty. As Gareth Oakley, Managing Director for SME Banking at Lloyds Banking Group, observed: “While the Brexit negotiations continue, businesses are focused on short term threats – including managing higher costs and maintaining positive cash flow – so that they can prepare for whatever 2018 brings.”

It is perhaps these economic concerns that account for the lower confidence expressed in the FSB survey, which focuses more narrowly on small firms. The SBI has only been in negative figures once before in the past five years, immediately following 2016’s referendum result, and firms’ responses reveal a tough climate for smaller companies. Climbing inflation has had an impact, as input materials and essential services go up in price, 73% of firms responding said that their operating costs have risen year-on-year, with 41% reporting an accompanying fall in profits.

Mike Cherry, National Chairman of the FSB is quick to point out one way that government can help: “Our late payment crisis means £18 billion is being withheld from small businesses across the UK, stifling investment for growth and causing thousands of firms to go bust every year. The new Small Business Commissioner must make ending this debilitating crisis his top priority,” he said.

Facing higher costs and uncertainty in the recruitment market, freelancers and contractors will be joining other small companies in hoping that 2018 brings more economic stability and a brighter outlook.

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