UK’s recovery feeds through to pay increases

Tim Wallace
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John Allan wants a bigger apprentice scheme to boost workers’ skills
BRITAIN’S small firms are increasingly confident, leading to more hiring and to pay increases, according to a study out today from the Federation of Small Businesses (FSB).

More businesses reported rising revenues than said their incomes were falling, by a margin of 19.5 per cent in the first quarter.

And a net balance of 12.5 per cent said gross profits are rising.

As a result the net balance taking on staff doubled from 2.1 per cent a year ago to 4.2 per cent now.

And the average firm expects to give pay rises of 1.8 per cent this year, up from 1.5 per cent over the past year.

Falling energy prices are contributing to that – the FSB found 44.4 per cent of small firms reporting rising costs, a record low in the survey’s five year history. That figure is down from 60.3 per cent in the final quarter of 2014.

The economy’s growth spurt is also helping firms access finance.

The study found that of the firms applying for bank loans, the proportion who are accepted is up from 45 per cent a year ago to 57 per cent now.

“One of the few areas of concern within the positive picture remains skills. It’s crucial that new and existing small firms have appropriately skilled staff and targeted support at a local level to grow their businesses,” said FSB chairman John Allan.

“Better skilled workers are critical for the UK to close the productivity gap and achieve long-term economic growth; as well as compete with other countries in the G7, such as France and Germany.”