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UK Small Firms' outlook 'worsens'

Posted by Brian on 17th December 2007 at 12:45 PM
UK Small Firms' outlook 'worsens'

The outlook for small UK firms has worsened in recent months, amid continued uncertainty, a survey from Bank of Scotland suggests.

The bank's confidence index showed a drop in the third quarter from 48 in April to 42. The lower the number the more pessimistic the outlook.

"The vast majority of small firms are undoubtedly taking a more cautious approach," said the survey.

The findings come as economic growth forecasts are being lowered for 2008.

'Little support'

More than 60% think economic conditions will get worse in the year ahead, a 24 percentage points rise on the same period in 2006. Only 7% think the outlook will improve.

"We can expect recruitment to be measured and growth to be steady but slowing," said Ivan Matviak, head of the bank's business banking division.

He added that an increasing tax burden and an "impenetrable maze of red tape" meant firms would have to continue operating in a "regulatory and fiscal environment that offers very little support or encouragement".

Only 33% of those with small firms think it is a good time to have a firm in the UK while 38% believe the opposite.

The area with the most pessimistic outlook among small firms is Yorkshire and the West Midlands, Scotland was the most optimistic.

The survey follows a credit crisis over the summer, that is making banks more reluctant to lend money, except to those with strong credit histories.

The findings were based on conversations with 1,000 executives or owners of small firms whose annual turnover reached up to 1m. The original research was collected by The Opinion Research Business.

Source: BBC News

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