The emergence of the omicron variant and fears of further Covid restrictions contributed to small business confidence plunging in the South West at the end of 2021.

The FSB (Federation of Small Businesses) – Britain's biggest business representation group – invites its members to share their confidence levels on a quarterly basis and in the run up to Christmas they revealed a fall of nearly 30 per cent since the previous report in the autumn.

Concerns of what would happen with omicron led to nervousness amongst both business and customers in the region and are likely to have been among the factors which markedly hit the confidence of the South West businesses polled and also saw the region become one of the least optimistic in the country for their 2022 prospects.

Although it is hoped the easing of Covid restrictions now on the way may help to restore some of the business sentiment, the FSB's regional policy representative, Craig Carey-Clinch, said the results of the 2021 quarter four survey were a stark reminder of the difficulties many small businesses throughout the South West face as we enter the New Year.

"What we hope this report will do is to serve as a reminder to stakeholders in and outside of Government that they must continue to support, incentivise and invest in our small business community as we enter 2022. The South West's SMEs have had so many issues to deal with over the past two years and have fought on valiantly, but they can't do it alone and we need help and understanding if we are to see those confidence levels rise once again."

As well as confidence levels falling, the report also revealed fears over future profit levels and concern over the current economic conditions in the UK for trading. Businesses polled also reported that getting appropriately skilled staff and reduced customer demand were also among the biggest barriers to growth.

There were, however, some reasons to be more optimistic from the report. Nearly half of those polled said that their growth aspirations in the next 12 months were to grow either 'rapidly' or 'moderately' and in addition more businesses intended to increase their headcount than to decrease it in the current quarter.

The South West report was part of a larger nationwide FSB survey for the same quarter which also revealed that the vast majority of businesses – over three-quarters – say that their costs are now rising. This figure is at a seven year high. The national report also flagged up that confidence is lowest amongst both the retail and accommodation and food sectors – something that will no doubt have been affected by the timing of the report in the Covid-hit run up to Christmas.

FSB National Chairman Mike Cherry urged the Government not to miss out on the warnings revealed in the survey.

"Small business confidence dropped in every quarter of 2021. As we move into the New Year, the Government needs to act now if we're to reverse that trend and secure an economic bounce back."