Britain’s three million small and medium enterprises (SMEs) are losing confidence in the economy, according to a new survey from the The Tenon Group.
The Q2 2003 edition of the
Tenon Forum found that 46% of businesses questioned are negative about economic prospects, with a mere 2% feeling positive on the outlook. This is a deterioration in outlook since the Q1 survey, when only 42% felt negatively. Nevertheless, the majority of SMEs remain ‘quite positive’ about the economy.
When asked specifically about their own businesses, the prognosis was pretty gloomy; 53% feel negative about the impact of the UK business environment on their performance over the next twelve months, compared to 39% last quarter.
The report also says that the effects of the war in Iraq and the threat of terrorism are hitting SMEs hard. It says that 44% of SMEs claimed that these factors are preventing them from meeting their business objectives. A fall in consumer spending levels is also causing increasing concern.
Tenon argues that these findings call into question the Chancellor’s budget forecasts of a strong recovery in 2004 and 2005, with economic growth rising to between 3.0% and 3.5%. It also casts doubt on the Government’s ability to pay for its public spending commitments out of existing tax rates (see Brown’s Budget Banks On Global Upturn).
