Small business optimism 'slowly improving'

Business optimism among small and medium-sized companies is slowly improving, new research has suggested.

According to the Confederation of British Industry (CBI's) latest SME Trends Survey, business optimism among small firms increased to a balance of -9% in the three months to July - recovering from -42% in the previous quarter.

The survey suggests that growing export prospects may have influenced this shift in attitude, with respondents the most confident they have been about foreign demand for UK goods since April 2007.

Meanwhile the rate of decline in the volume of new orders appeared to ease, up to a balance of -34% from -51% in the previous quarter.

However, the survey also reiterated that access to credit has continued to limit smaller firms' export plans – echoing the British Retail Consortium's claims last week that SMEs are still suffering from lower levels of lending.

Russel Griggs, chairman of the CBI's SME Council, said: "Orders and output are still falling, but things aren't quite as gloomy as they were three months ago.

"The outlook for medium-sized firms looks positive, but it is still too early to say whether export-led growth will deliver a platform for sustained recovery.

"It is unclear when a return to growth for smaller firms will come, and it is worrying that credit constraints remain a concern. However, we hope these will loosen over the coming months as the flow of finance to SMEs increases."

IMAGE Tammie Arroyo/UK Press/Press Association Images