Gloomy Tyneside firms urged to keep faith

Apr 27 2009 by Karen Dent, The Journal

SMALL businesses in Newcastle are the least confident in the UK that they will survive the recession intact.

Just one in 10 reckons it will get through the economic crisis unscathed and almost a third predict that business growth in the next year will halt. Only 4% said their business had not been hit by the recession at all.

The O2 Small Business Confidence Index also discovered that Newcastle’s small firms considered financial issues their main concern, with cash flow worries topping the list, followed by a lack of support from banks. However, 62% admitted the attitude of their banks had not changed despite the recession.

Firms said a reduction in corporation tax and commercial rates relief would be the best way for the Government to try to restore confidence to the sector, but recent cuts in interest rates had made little difference. Newcastle also had the highest percentage of small firms – 22% – planning redundancies as part of their cost-cutting measures, while 40% said they had frozen recruitment.

O2 head of small business marketing Simon Devonshire said: “At the end of the first business quarter of 2009, it is evident that confidence levels of small business owners in Newcastle are low. While conditions are clearly very tough, it is encouraging that small businesses are determined not to fall victim to the recession and are scrutinising their business model to see where savings can be made and new business won.

“Confidence is essential for anyone running a small business and in the current economic climate keeping confidence in yourself, your team and your business is more important than ever.”