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Small business confidence up but new jobs are scarce

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Confidence among small businesses has staged a moderate recovery in the first quarter of the year, a new survey has indicated.

However, that boost in optimism has not seen a corresponding rise in new job prospects.

The latest Voice of Small Business Index, published by the Federation of Small Businesses (FSB) and covering over 1700 firms, found that confidence among the small business community climbed by 6.7 per cent from January to March 2011.

Confidence actually slipped in each quarter of 2010. In total, 36 per cent of small firms expect overall business performance to improve in the next three months. 

But respondents to the survey also reported that job creation was proving tough.

A balance of -6.5 per cent reduced their workforces during the first quarter. The picture isn’t quite as gloomy for the coming months. A balance of -1.7 per cent said they would be cutting back on staff numbers during the second quarter of the year.

John Walker, national chairman of the FSB, said: “The fact that more small businesses had to lose staff in this quarter than they anticipated is a worry – especially as female and youth unemployment both edge towards a million. If the Government truly wants the private sector to pick up the slack that its austerity measures create, small businesses need a helping hand.

“At the end of 2010 the feeling across the country was very downbeat as businesses lost confidence, having to deal with a rush of challenges from the impending rise in VAT, to the economy dipping back into negative territory. This continued into 2011 as fuel prices increased and inflation affected spending power. 

“While the overall picture suggests that members are bouncing back from a harsh winter, and that the economy should return to growth in the first quarter, questions still remain about the strength of recovery.”