NEW research by the Federation of Small Businesses (FSB) has found small business confidence at a four year low following the largest annual drop in the FSB Small Business Index (SBI) since it started in 2010.

The latest SBI, gathered before the EU referendum, showed the North West region languishing fourth from bottom of 13 UK regions, with smaller firms planning to cut jobs for a second consecutive quarter. FSB members also reported falling profits with increases to the cost of labour and the overall tax burden listed as major contributors to a rise in the cost of doing business.

The index also saw a sharp fall in investment intentions with just 12.2% of small firms planning new capital investment in the next 12 months - less than half of the 31.9% planning the same a year ago. This came despite improvements to both the availability and affordability of credit.

With the EU referendum result bringing political uncertainty, economic volatility and predictions of an economic slowdown in the UK and our main EU trading partners – FSB is calling on policy makers to take rapid steps to ease the cost of doing business and shore up small business confidence.

FSB regional chairman for Manchester and North Cheshire, Simon Edmondson, said: “Even before the EU referendum vote our members were reporting tough business conditions. It’s quite likely business confidence will be have been further smashed by the outcome. “The importance of small businesses to the success of the economy means that the Government needs to be proactive in providing further support for the business community.

“Here in this region we need firm commitment that the Northern Powerhouse project is still on track, and the likes of HS3 and motorway upgrades will go ahead as planned. It would be devastating for business confidence if these big transport projects are binned. Delivering on pledges such as simplifying the tax regime and investing in workplace skills will also help small businesses to increase their productivity and contribution to the economy,” he added.

FSB has also called on the Government to roll back any plans which will make doing business more difficult or costly, including ending moves to introduce disruptive digital tax reporting and honouring commitments to expand small business rate relief.

Edmondson added: “The Low Pay Commission should be especially vigilant when recommending next year’s National Living Wage rate - taking extra care to ensure small businesses can sustainably support higher wages at this challenging time.”

The next FSB Small Business Index for the third quarter of 2016 will be published on September 19.