Rising costs and continued economic uncertainty are taking their toll on small firms, leaving them unable to grow their business, a report warns.
Two-thirds of 1,200 company owners surveyed by the Federation of Small Businesses (FSB) said they did not expect performance to improve in the coming three months.
Almost half feared things would get worse, the highest figure for five years, said the FSB.
Investment plans are being put on hold and fewer than one in seven employers are planning to hire staff in the next few months, the study suggested.
Firms trading internationally have been particularly hard hit by the uncertainty, said the FSB.
Chairman Mike Cherry said: "These findings must serve as an urgent wake-up call for policymakers. Even in the aftermath of the financial crash, we didn't see such a sustained string of negative confidence readings.
"Three years of political uncertainty and rising costs have stifled output and left small firms unable to plan, invest and grow.
"There's a real sense of exasperation among small firms. Big decisions - whether that be taking on new staff, purchasing machinery or embarking on sales in a new country - are being put on hold because we have no idea what our trading environment will look like in less than four weeks' time.
"We need the Government to seize this final opportunity to secure a Brexit deal: one that protects free trade, enables access to the right skills and includes a transition period."
