Small and medium-sized businesses (SMBs) are cautiously optimistic heading into 2013 as they look to invest in their operations.
A new study from the Federation of Small Businesses (FSB) shows conditions are gradually improving for many SMBs in the UK.
The Small Business Index – the measure of confidence in the sector – fell by 1.1 points against Q3 2012 to record a score of -5.6.
However, it is some 18.8 points higher than Q4 last year – just as the economy entered into double-dip recession.
In past quarters, the index has been a good indicator of GDP, so signs of optimism within the SMB community could be a positive indicator for the economy as a whole.
The FSB found that investment is a priority for around a third of firms in the coming 12 months.
John Walker, national chairman of the FSB, said the report reveals "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 stated.
"However, small firms want to get on, grow their business and invest. 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 limits."
Mr Walker said there is still more to do, especially around accessing finance.
"While more small firms have been accepted this quarter, it is clear from our research that others continue to struggle," he stated.
"Previous recessions have shown that demand for finance is at its highest during the recovery stage."
Mr Walker said SMBs are unconfident that the banks will lend to them, and this issue must be resolved by the small business bank.
It needs to open up competition, especially if small firms are to bring forward investment plans, he stated.
Posted by Alex Boardman