Business gloom spreads to small firms

Business confidence has fallen steeply over the last quarter, The Institute of Chartered Accountants in England and Wales (ICAEW) has said.

And it is the country's smallest firms that are the most pessimistic, according to the institute's latest Business Confidence Monitor (BCM).

The quarterly BCM index records the sentiment of businesses across the economy on a scale of 100 to -100, where positive figures show confidence and negative figures pessimism. The index has fallen from -7.2 in the first quarter of 2008, to -19.7 in the second quarter.

According to the index, the confidence of small firms with fewer than 10 employees has dipped the most significantly, falling sharply from -3.1 in Q1 to -26.6 in Q2.

"The slowdown in the economy is no longer just an issue in the City of London," said ICAEW chief executive Michael Izza. "It has spread to all sectors, to businesses of all sizes and across all regions."

"Raising finance continues to be an issue," he added. "There are schemes which companies may draw on for support in this area such as the SME Funding Advisor Scheme which our members are involved in."

"However I would urge the banks and government to ensure help is available to small and medium-sized businesses during this downturn as they are the key drivers of the UK economy," he added.