Small business confidence is slowing down, according to the Federation of Small Businesses (FSB).

The survey of more than 1,500 businesses found that 58% expect to grow in the next 12 months compared to 65% a year ago.

In addition, 22% of firms plan to invest this quarter, compared to 26% a year ago.

The FSB attributes measures announced in the Summer Budget such as changes to dividends tax changes and the forthcoming introduction of the national living wage as the reasons behind the slowdown.

However, there was some positive news:

• 62% of businesses who applied for a bank loan were successful compared to 50% a year ago

• small business productivity was 3% this quarter, compared with 0.6% 12 months ago.

Nigel Holland from Holland & Co Chartered Accountants said:

“ At my firm we have noticed that there has been a drop in confidence from business owners. It is very difficult to pinpoint exactly why this is the case but I suspect that the new Budget rules on taxation of dividends coupled with the cost of businesses introducing auto enrolment for pensions could be important factors.

It is encouraging to see that a large number of applicants for bank loans are now being successful compared to this time last year.”