SMEs losing confidence

Britain’s three million small and medium sized businesses are losing confidence in the economy, according to research into 'entrepreneurial Britain'.

Research of 1,000 SMEs carried out for the Tenon Forum Quarterly Report by NOP found that 61 per cent believe that economic uncertainty is preventing them from meeting their business objectives, up from 54 per cent last quarter. The number feeling negative about the impact of the UK business environment on their prospects over the next 12 months has also risen, up from 42 per cent to 46 per cent over the last quarter.

The findings call into question the Chancellor’s Budget forecasts of a strong recovery in 2004 and 2005 with economic growth rising to between three and 3.5 per cent. They also cast doubt on the Government’s ability to pay for its public spending commitments out of existing tax rates.

Alan Newton, Chairman of the Tenon Forum, said: "Small and medium sized businesses employ some 12.5 million people in the UK and generate an estimated £400 billion of GDP. They are the engine of our economy and if they are losing confidence, the Government has to take note."

London remains the most pessimistic region, with 63 per cent of SMEs in the capital feeling negative about the impact of the UK business environment on their business, up from 56 per cent last quarter. The most dramatic downturns in confidence have happened in the North East, where 60 per cent of SMEs now feel negative compared to 46 per cent last quarter, and the West Midlands, with negativity now standing at 53 per cent, up from 35 per cent.