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Small firms start to show a return to optimism

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The FSB Small Business index went back into positive territory in Q4 2016, following a dip to -2.9 in the third quarter, suggesting confidence is rising among small firms. 

The +8.5 score takes the index back to roughly the level it was at 12 months ago, before the EU referendum. Alongside this rise, there has been a decline in the share of small firms expecting business performance to worsen over the next three months, falling from 41.2 per cent to 32.4 per cent. This growing confidence mirrors data on broader economic performance. 

Inflation remains an issue, with 56.6 per cent of small firms reporting an increase in costs over the past three months, compared with the same period a year ago.