More than a quarter of small and medium-sized businesses are ‘only just surviving’ or being forced to make cuts and rationalise operations, according to a report published this week.
The latest quarterly Bibby Financial Services Business Factors Index also reveals that almost one in four (24%) believe trading conditions are worse than a year ago, while more than a third (35%) do not expect the UK economy to recover for at least three years.
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, said the results paint a “grim picture” of business confidence.
It said nearly two thirds (59%) 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%) of firms believe a loosening of lending criteria would most help to stimulate economic recovery, while 79% revealed they have applied for any external funding in the past 12 months.
“With murmurs of an impending second ‘credit crunch’ rife, UK businesses are still in for a bumpy ride,” said Edward Rimmer, UK chief executive of Bibby Financial Services. “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.”
Despite the apparent gloom, Rimmer said the research shows 39% of businesses across the UK are hopeful for the future. Its regional breakdown also suggests levels of optimism are rising as high as 70% in East Anglia and around the 50% point for many areas.