Confidence levels amongst entrepreneurs in the South West have taken a knock during the course of 2007, according to the latest results fromSmall Business Confidence Index by Bank of Scotland Business Banking.

The index, which measures small business optimism across five key economic areas, reveals a fall in small business confidence of four points since April earlier this year. The Index (which runs from 0 to 100 - where 0 is completely pessimistic and 100 is completely optimistic) shows that confidence amongst small businesses in the South West has fallen from 47 in Q2 to 43 in Q4.

A decline in the overall confidence indicator is reflected in key findings from the research. Three in ten (31%) small business owners in the South West believe that now is a bad time to be running a small business compared to over a third (36%) who still feel that it's good time. Nearly seven in ten (69%) now expect general economic conditions to worsen over the next twelve months – an increase of twenty one percentage points on those expressing a pessimistic outlook back in April. Given the uncertainty surrounding current market conditions, nearly half (45%) of the South West's entrepreneurs are nervous about the prospects for small business in Britain.

With optimism varying more by location than sector, small businesses in Scotland will end the year as the most optimistic about their future and the general economic climate with a score of 46 (down four points from April), whilst businesses in Yorkshire and the West Midlands end the year as the most pessimistic with a score of 39.

INDEX RESULTS

Economic conditions: By a margin of almost nine to one, small businesses in the South West think that the general economic conditions over the next 12 months will worsen (69%) rather than improve (8%).Two in ten (22%) think conditions will remain the same. 

Growth expectations: Despite the prevalence of pessimism towards economic conditions, nearly a quarter of small business owners (23%) are still expecting to achieve double digit growth in 2007.  

Demand for services: Four in ten (40%) expect demand for services and/or products to increase over the next 12 months. The number of owners in the South West who claim that business is quiet at the moment has doubled from 11% in April to 22% in Q4.

Recruitment intentions: Two in ten (20%) plan to employ more staff over the next twelve months – down six percentage points from April.

Running a business:  More than half (52%) think that it will become more difficult to run their business over the coming year as compared to the previous twelve months. Only one in nine (11%) expect it to become easier.

 Ivan Matviak, Head of Bank of Scotland Business Banking said:

"The economic uncertainty that has dominated the news agenda throughout the latter half of 2007 has clearly filtered down to the South West's small business community. Whilst there are still some healthy growth expectations amongst a significant proportion of these owner managers, the vast majority are undoubtedly taking a more cautious approach when assessing both their own business prospects and during the coming year and the outlook for economic conditions.  Based upon these results, we can expect recruitment to be measured and growth to be steady but slowing. However, faced with a growing tax burden and an impenetrable maze of red tape, businesses will have to continue operating in a regulatory and fiscal environment that offers very little support or encouragement."

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