More small businesses struggling to survive

A report for Bibby Financial Services says firms in this region have been hardest hit by the fledgling nature of Britain's economic recovery.

Two out of every five firms (41 per cent) said conditions are really tough and that they are only just surviving, according to the quarterly report, which tracks turnover levels and the economic outlook of small business owners and managers.

The study, for the three months to September, also showed

that firms in this region have described the greatest decline over the last three months, which marks a significant turnaround since the last index, when businesses here were the most positive in the UK.

Only 12 per cent of firms said they were doing well and had benefitted from the recession, compared with 41 per cent in the previous quarter.

Graham Cooper, Bibby Financial Services spokesman for Yorkshire and Humber, said: "The outlook of small businesses has changed drastically with the cuts in Government expenditure announced, hitting confidence hard.

"Research conducted ahead of the spending review showed Yorkshire to be among the least resilient regions to economic shocks and said Yorkshire would struggle to cope with any further public sector cuts.

"Unfortunately, this assessment seems to have been accurate, as the outlook of firms has deteriorated substantially in the last three months.

"The focus must now be on supporting small and medium-sized businesses to help them overcome the challenges they are facing."

The survey also showed that nearly three-quarters (71 per cent) of firms have been forced to manage debt more stringently, with 65 per cent deciding to cut costs. There was some hope, however, with 53 per cent of firms experiencing an increase in new customers

The business factors index, compiled by invoice finance provider Bibby Financial Services, tracks movements in small business turnover among its 3,000-strong client base.