Mid-sized businesses believe the UK could slip
back into recession and are cynical over government efforts to
improve bank lending, a CIMA study has found.
Forty-three percent of mid-size businesses are
not confident the government can restore economic growth while only
5 percent expressed confidence that government’s new lending
initiative, Project Merlin, will improve lending to the mid-sized
business sector.
The UK government has been heavily criticised
for wide-reaching and rapid spending cuts to the public sector and
survey respondents said the cuts will affect their businesses. A
third of businesses have lost revenue as a direct result of public
sector spending cuts and one in five (19%) expect the cuts to lead
to a reduction of their company’s headcount in 2011.
On average, 7 percent of jobs will be lost at
mid-sized businesses this year with operational functions the
hardest hit followed by finance and IT.
CIMA executive director of brand, profile and
marketing Ray Perry said the sentiment was still more positive than
it has been in recent years.
“It’s really changed from 2009, we’ve gone
from doom and gloom to a great deal of confidence in the
mid-market,” Perry said.
“The biggest thing that came out of this was
around the public sector. There are a lot of private companies that
supply and engage with the public sector itself so any spending
cuts there do have a knock on effect – there’s nervousness around
that.
“There’s still a lack of confidence about the
economy and economic growth. In terms of their own businesses, they
are very confident, believing they can now survive comfortably.
Confident of survival
Despite the lack of confidence on the economy,
98 percent of mid-sized companies are confident of the survival of
their business, which is the highest level reported since the
survey began in 2009.
CIMA’s quarterly Mid-Sized Business Confidence
Monitor, in its third year, surveyed 303 mid-sized businesses
between 25 February and 14 March 2011. The International
Accounting Bulletin is an official media partner of the
report.
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