How SME sentiment looks for the New Year

IN: Business news

Small and medium-sized enterprises (SMEs) had their hands full as the Christmas and New Year's rush came to a head.

While it is bound to have provided organisations with a welcome boost, not to mention the wider economy, the question of business sentiment for 2013 remains.

The latest quarterly Small Business Index from the Federation of Small Businesses (FSB) has shed light on many companies' attitudes for the year ahead.

Based on the responses of 2,546 firms, the index fell by 1.1 points compared to the third-quarter but remains 18.8 points higher than in the final quarter of 2011.

Although there was a slight quarter-on-quarter fall in business sentiment, the fact that it is considerably higher than a year previously demonstrates a better level of confidence among SMEs.

Chairman of the FSB John Walker said: "This quarter's report shows cautious optimism from the UK’s small firms. There's no doubt that it is still a tough environment and the Autumn Statement highlighted that it's going to be tougher for longer."

He added that despite this, small firms want to grow their business and invest, with the index showing that around a third of SMEs plan to make investments in the coming 12 months.

The FSB hopes that the chancellor George Osborne's decision to increase capital allowance to £250,000 in the Autumn Statement will encourage more firms to invest in 2013.

"We urged the chancellor to put small firms at the heart of the Autumn Statement and many of his plans will help - especially raising the tax free investment limit," Mr Walker said.

Recent research from British challenger bank Aldermore revealed that 38 per cent of 300 SMEs surveyed are continuing to rely on their cash reserves to finance their future growth.

Interestingly, 12 per cent of respondents said they would look to bank loans to help realise their ambitions, while ten per cent will harness the benefits of leasing or hire purchase.

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