UK small business confidence worse than last year: Goldman Sachs

New research from Goldman Sachs underscores fraught economic conditions currently hitting small business owners in the UK.

Staff resignations, rising energy costs and follow-on inflationary pressures are at the forefront of concerns for entrepreneurs in the region. 

• Of 10,000 small business owners contacted by Goldmans, nearly 5,000 reported business confidence lower than that during the peak of covid in 2021.

• 47% of respondents believe the economic outlook for the second half of 2022 is worse for small businesses than that during this time last year. 

(Source: Goldman Sachs) A summary infographic outlining the latest results

Rising costs the dominant concern 

A UK inflation rate of 9% reflects a 40-year-high, with the same situation mirrored in the US: inflation in the US is at 8.6%, also a forty-year-high.

• 78% of small business owners say inflationary costs have ultimately hurt their profit margins since the start of 2022. 

• While only 47% of UK-based respondents reported worse economic outlook than this time last year, a larger 65% cohort reported inflationary costs will hurt the future growth of businesses.

Energy costs a major concern 

A large part of the UK’s inflationary situation is due to rising energy costs across the region for businesses and households. This continues to proliferate as the Johnson government retains staunch opposition to introducing price caps.

• 61% of small business owners reported having been negatively impacted by rising energy costs through 2022.

• 55% of respondents reported perceptions that future business growth will remain constrained as energy prices in the UK remain high, a larger cohort than the 47% reporting worse economic outlook. 

‘Great resignation’ trends continue

Interestingly, 54% of respondents claimed small business operations have been negatively impacted by staff shortages in the first half of 2022. 

Asked by Goldman Sachs what government-level supports would aid small business operations, respondents targeted three priorities: 

• Capping energy prices in the UK 

• Acting to curb inflation 

• Increasing tax relief measures for small business 

Whether or not small businesses will get what they want remains to be seen.

(Source: TradingEconomics) A line chart showing UK inflation growth since last July