Small business confidence damaged

Research by the Tenon Forum shows that two-thirds of bosses claim to be confident about economic conditions and their impact on businesses, fewer than previous figures released six months ago.

The Forum said business confidence appears to have "hit a plateau" and may face drops in the near future. It blames the run-up to elections in the UK and US, coupled with problems with the pensions and savings industries as well as high fuel costs.

Jolyon Stonehouse, chairman of the Tenon Forum, said: "We believes that this survey result could denote the climax in entrepreneurial confidence for this cycle. Worries about personal financial issues - such as house prices .and recent interest rate rises - clearly could translate and impact into worries about their business."

Confidence is also being affected across industry sectors, said the group, with the exception of construction, which saw a minor increase of 2 per cent of bosses who are positive compared with April.

Finance and business services seem more confident, with 76 per cent remaining positive about the future of their business. In contrast transport and communications firms, feel less secure with almost a third feeling negative, compared to 23 per cent six months ago.

Rising fuel prices have placed a burden on distribution in this sector and those who rely on them, said the group.

Stonehouse added: "As the UK economy prepares itself for Christmas, it appears that SMEs in retail are not expecting a high street spending frenzy. If consumer confidence is underpinning the British economy, then the outlook does not look particularly healthy."

Regionally, London, the South East and the East of England are more assured with the UK business environment, whereas six months ago they were the most negative.

Wales and the South West saw the largest reduction in confidence since they were last surveyed, with a drop of 18 per cent. Scottish firms followed suit, with a reduction of 13 per cent in business confidence.