Concern as fewer small firms turn to banks for finances

The Federation of Small Businesses (FSB) said a survey of over 2,600 of its members showed a welcome rise in optimism, although fewer firms expected to grow this year.

Access to finance, consumer demand and the state of the economy were given as barriers to growth. The FSB said it was worried by a finding that fewer companies are approaching banks for finance, a trend it said must be tackled in next week’s Budget. The biggest rise in confidence was recorded in the North East.

A separate report by Leeds-based accountancy and business advisory firm BDO also suggested that business confidence is improving. The BDO Optimism Index increased by 1.7 points last month following its 21-year low reading in January. The index, which predicts business performance two quarters ahead, increased to 90.6 in February from a reading of 88.9 in January. But businesses still do not anticipate growth in the next two quarters, according to the data, and further inflationary pressure on businesses bottom lines is expected.

Ian Beaumont, partner and head of BDO in Leeds, said: “We encourage the MPC (monetary policy committee) to increase its quantitative easing programme, but the Government needs to take further action to ensure that funding goes to where it is most needed – to British business and to the housing market.

“Not only have we got the most consolidated banking market in the G7, we also have the smallest corporate bond market. Action needs to be taken both to address these issues and to help the banks to accelerate economic recovery.”