SMEs 'only just surviving'
Aug 10 2011
Many businesses are being forced to make cuts in the face of a continuing tough economic climate
More than a quarter of small and medium-sized businesses are ‘only just surviving’ or being forced to make cuts and rationalise operations, finds research.
Almost one in four (24 per cent) say trading conditions are worse than a year ago, while more than a third (35 per cent) do not expect the UK economy to recover for at least three years, according to the latest quarterly Bibby Financial Services Business Factors Index.
Edward Rimmer, UK chief executive of Bibby Financial Services says, ‘With murmurs of an impending second ‘credit crunch’ rife, UK businesses are still in for a bumpy ride. The second quarterly Index shows businesses are a long way from recovery and, although turnover is stable, there is a danger of negative growth turning into a backwards slide towards recession.’
The Index, which tracks the turnover levels among nearly 4,000 of Bibby Financial Services’ UK client-base alongside the outlook of 450 business owners across the UK, finds that nearly two thirds (59 per cent) of companies are planning on cutting costs, while half intend to manage suppliers more carefully to prepare for further economic challenges.
Nearly a quarter (24 per cent) of firms believe a loosening of lending criteria would most help to stimulate economic recovery, and more than three quarters (79 per cent) of businesses have not applied for any external funding in the past 12 months.
However, despite the perceived doom and gloom, the Q2 research shows 39 per cent of businesses across the UK are hopeful for the future, with a regional breakdown showing levels of optimism rising as high as 70 per cent in East Anglia and around the 50 per cent point for many areas.
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