The Federation of Small Businesses’ (FSB) quarterly survey has revealed that the UK tech and science sectors are confident in their outlooks – more so than other sectors. The report noted that confidence is being restored after a decline at the end of last year, but ‘dark clouds’ are on the horizon as costs remain high.

The study found that sentiment improved among small business owners and sole traders over the first three months of the year. However, FSB’s confidence measure scored minus 2.8 points in the first quarter of the year, which means more firms felt pessimistic than optimistic.

Interestingly, there was an improvement from the confidence drop in the final quarter of 2022, which had a negative reading of minus 45.8 points as retailers and hospitality firms were struck by higher costs and reduced consumer spending.

Tech and science sectors were found to be leading the way with a positive confidence reading of 14.9 points. The research also found a major rise in confidence among sectors including retail, accommodation, food, and manufacturing in the latest survey, although they all remained in negative territory.

Representing over 150,000 business owners and self-employed workers, the FSB surveyed nearly 700 people in the latest iteration.

Commenting on the findings, James Campanini, CEO of AWS specialist VeUP said: “British businesses have shown remarkable resilience in the face of soaring inflation and interest rates, so it’s encouraging to see confidence returning to smaller firms. However, with lingering uncertainty, the time is right for companies to think again about key resources such as IT investment and optimising cloud environments to better equip them for potential challenges in the future.”

“By building a leaner, more effective infrastructure, organisations will be much better placed to survive and thrive, whatever the economic circumstances,” added Campanini.

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Falling sales were an issue for many small firms over the first quarter. Two in five small businesses said their revenues fell during the period, compared to a third who said sales had risen.

At the same time, around 90% of businesses said their costs were higher than in the same period last year, largely thanks to soaring utilities costs, as well as a record number of firms saying staff wages had shot up.