SMEs starting to show slight signs of optimism

The FPB's July economy watch shows that just over half of small business owners expect to see the cost of doing business increase, whilst just 3% think it will fall.

When SMEs were asked what factors would help them grow their business, 26% said an improvement in business or consumer confidence would be the key trigger and 18% said the improvement or at least stabilisation of the UK economy.

Meanwhile some small businesses are investing less in staff training with 11% saying they will spend less in the current months.

Access to finance is a major problem says the FPB. Less business owners have been able to obtain finance and those who have been successful face increased bank charges on the loan. Others have had overdrafts reduced or in some instances cancelled altogether.

Chasing outstanding debtors is still a major issue for a lot of small business owners. The there has been some improvement as large outstanding contracts have been settled and some SMEs and limited company contractors have adopted better debt collection methods. But business owners still resent spending so much time chasing outstanding debts when they could be concentrating on increasing turnover.

Meanwhile, a leading economic forecaster from the Independent Treasury Economic Model Club has said that the Bank of England will need to keep interest rates at their current low for the next 4 years.

Professor Peter Spencer, the ITEM Club spokesman, said that the 0.5% base rate will start to look like normal and if the Bank does increase the rates, it will then have to reduce them again to counterbalance the public sector austerity cuts.

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