Small business leaders have urged the Government to steady the ship as a new survey showed confidence dropping among members.
The Lancashire-based Federation of Small Businesses is urging the Government not to revisit shelved plans for tax increases on the self-employed.
Its latest Small Business Index (SBI) shows it down to +15 in Q2 2017 from +20 in Q1.
That marks the first fall in the index since the EU referendum.
When asked about threats to expansion plans, small firms cited the domestic economy.
More than half see it is a barrier to growth. Consumer demand (30%), labour costs (24%) and the tax burden (17%) are also commonly flagged.
Operating costs for small businesses are now at their highest in four years.
Mike Cherry, FSB national chairman, said: “Small businesses were feeling more pessimistic even before the general election was called. Now alongside increasing inflationary pressure, a business rates revaluation and rising labour costs, they have a whole new wave of political uncertainty to contend with.
“Clearly this is not the time to revisit failed plans for a national insurance hike on the UK’s 4.8 million self-employed. These strivers are the engine of our economy. In this unforgiving climate, the last thing they need is increased cost.”
The East Midlands (+35), Wales (+31) and London (+25) have the highest regional confidence readings, while Yorkshire (+14), the North West (+9) and Scotland (-4) are among the lowest.
Mr Cherry added: “Consumer facing businesses are really starting to feel the squeeze. Many small firms that operate in the retail and hospitality sectors depend on EU 27 workers. Ensuring these vital employees have the right to remain needs to be a first port of call.
“For decades we’ve heard Governments discuss the need to create a balanced economy. It’s time for meaningful action.”