New research carried out by the Small Business Research Trust, in conjunction with the Forum of Private Business, shows that smaller firms are bearing the brunt of the credit crunch. The FPB believes that barriers to growth faced by small businesses, in particular the burden of tax, red tape and late payment, must be urgently addressed.

Of the small firms surveyed as part of the SBRT's report for the first quarter of 2008, 74 per cent with both overdrafts and loans reported an increase in lending rates over the last six months. Rising interest rates are another concern, with 59 per cent of respondents indicating that they had had a negative or very negative impact on investment. Purchasing, employment and sales have also been hit.

"The survey shows trading conditions have declined significantly this quarter in all areas - sales, employment and investment, with only medium-sized businesses suggesting any growth in levels of employment," said the FPB's Chief Executive, Phil Orford.

"This contrasts with the optimism expressed at the end of 2007, where confidence in the future level of economic growth still showed signs of remaining stable. Expectations have weakened considerably since the last quarter; each measure has moved into a negative balance and all sizes of businesses, in all regions of the country, now expect a much lower performance for 2008."

5:30pm Wednesday 26th March 2008

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