Small firms 'more confident'

28-05-2007

Small firms 'more confident'
Business confidence among small and medium-sized businesses in the UK has reached its highest level since 2004, a new survey has found.

Despite rising interest rates, 64 per cent of such companies questioned by accounting firm KPMG said they predicted a positive outlook for small and medium-sized businesses over the next 12 months.

The Bank of England recently raised the benchmark rate of borrowing to 5.5 per cent and there are fears that consecutive rate rises could curb consumer spending and harm business profits.

But the KPMG survey, which looked at the views of businesses with an annual turnover of between £5 million and £500 million, also found that smaller firms were more confident about their own individual prospects.

Of those questioned, 76 per cent said they felt confident about the outlook for their business over the next year – the highest proportion recorded since 2003.

Small and medium-sized firms were also upbeat about exports, with 74 per cent believing that smaller companies were either "competitive' or "extremely competitive" within Europe.

Mel Egglenton, UK head of middle market for KMPG, said that it was difficult to determine exactly why small and medium-sized businesses were feeling more optimistic.

But he stressed that action taken by many firms to boost their efficiency in light of increasing energy costs may have left their businesses more robust and added to their confidence.

"It appears that those who felt the pinch over the last year or two have now steadied the ship and are looking forward to the next 12 months with a renewed sense of optimism," Mr Egglenton said.



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