PAYE umbrella contractors on the lookout for new placements have mixed news to take on board with the release of the Federation of Small Businesses’ latest Small Business Index. The survey covered 1700 firms across the UK and found a modest but healthy climb in confidence amongst those polled. Between January and March 2011, small business confidence rose by 6.7 per cent. This is in marked contrast to the whole of 2010, during which confidence declined in every quarter.

However, the survey also suggests that it’s not quite time to break open the champagne – job creation, including posts sought by contractors working through umbrella companies, was proving considerably tougher to achieve. During the first quarter of 2011, small firms found that they were continuing to lay off staff, although fewer anticipate cutting back on personnel in the months ahead. More than a third – 36 per cent – expect business performance to improve during the next quarter.

FSB National Chairman John Walker acknowledged that the cutbacks in personnel during Q1 were a worry, especially in a context where youth and female unemployment are both nearing 1 million. If the Government really wants the private sector to compensate for its public sector austerity measures, he said, “small businesses need a helping hand.”

Although small businesses appear to be bouncing back from the VAT rise, the harsh winter and the negative effects on consumer spending caused by rises in fuel costs, Mr Walker added that “questions still remain about the strength of the recovery.” Let’s hope Mr Cameron is taking heed.

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