According to the small business index compiled by the Federation of Small Businesses (FSB) which measures firms’ prospects for the next three months gave a reading of 8.6 for the first quarter, down from 21.7 in the fourth quarter and its lowest level since the first quarter of 2013.
Small firms also saw the first decline in job creation nationwide since the second quarter of 2013, .
The FSB said the fall in confidence was partly due to fears over the strength of the UK and global economy while Government policies such as the national living wage and pensions auto-enrolment had also contributed.
It pointed out that the last time confidence was lower at the start of 2013 was “a time when there were still huge doubts over the strength of the UK economy and many were discussing the prospect of a ‘triple dip’ recession”.
FSB vice-chairman Sandra Dexter said: “Small business confidence has clearly faltered, which is why the welcome small business focus in the Budget is so important.
“We need a renewed push for growth and productivity – with policy makers delivering a sustained package of support for ambitious small firms.”