Confidence among UK small businesses has fallen and many firms expect trouble ahead as economic uncertainty continues to take its toll.
The findings show that confidence among SMEs has declined by 5.6 points year-on-year, with UK businesses experiencing their least confident start to a new year since 2014.
This has had a knock-on effect on investment decisions, with the average amount of capital SMEs plan to invest in their businesses falling for the fourth consecutive quarter.
The number of SMEs that say they are holding back on investment due to economic uncertainty has risen from 26% in Q4 2018 to 33% in Q1 2019, the highest level since 2015. Brexit uncertainty, in particular, is holding back 30% of the small firms polled.
In addition, almost a fifth (19%) of SMEs say that rising costs are their biggest challenge while competition from other firms (16%) and late payment (16%) are also significant threats.
"If SMEs are the warning lights of our economy, this quarter signals to us that they see trouble ahead," said Edward Winterton, UK ceo of Bibby Financial Services.
"We typically observe a seasonal bounce in SME confidence at the start of a year, as businesses begin with renewed optimism. This year, the bounce was lower than ever before, highlighting how Brexit uncertainty is taking its toll on UK SMEs.
"Political uncertainty is acting as a brake on the economy ? Brexit has been an agonisingly slow process resulting in our SMEs pulling back on investment when our economy needs stimulus to grow."
The data has also found that SMEs want more government support to help them through Brexit. Over two-thirds (68%) would like the government to introduce tax breaks for businesses, while 65% want lower business rates. Half of those polled said the government should ensure that tariffs on goods to the EU are avoided.
"There is often talk of protecting the City of London from Brexit, but our SMEs need protection too," said Winterton. "I hope the government will act to reduce the impact of Brexit on UK businesses."
Written by Rachel Miller.