There was fresh hope for the UK economy today with new figures revealing that the amount of small businesses optimistic about their prospects has risen by 22 per cent over the past year.
The Bank of Scotland’s (BoS) latest small business confidence survey revealed that 86 per cent of small firms were optimistic about how their companies will fare over the next 12 months.
This figure represents a 22 per cent rise on optimism levels recorded by BoS in November 2002.
The latest quarterly survey revealed that 43 per cent of small firms planned to increase investment in their business over the next year, while 35 per cent expected to take on extra staff during the same period.
The investment figure represents a 20 per cent rise on last November’s levels, while the amount of firms planning to increase their workforce has leapt by 12 per cent over the past year.
Firms in the manufacturing and engineering sector reported the sunniest outlook of those surveyed, with a 35 per cent increase in confidence levels since July.
The leisure and tourism industry also experienced a surge in optimism, with 14 per cent more firms having high hopes for the future than in November 2002.
The service sector experienced a 10 per cent drop in optimism over the last quarter, while the feel-good factor also deserted the agriculture industry, although four in five companies in the sector didn’t expect things to get any worse over the next year.
However, despite the widespread optimism, the BoS research suggested that life has got tougher for entrepreneurs in recent times, with 67 per cent of small firms claiming that it has become more difficult to run their business over the last five years.
Nevertheless, the rise in optimism is another encouraging sign for the UK economy, following figures out this week which revealed a rise in confidence levels in the ailing manufacturing industry, which has suffered badly over the past year.
The recent good economic data has put pressure on the Bank of England to raise interest rates, although some business groups have called for a more cautious approach, claiming that the economy still needs “breathing space” to recover.
Tom Abraham, managing director of Bank of Scotland Business Banking, said that this research reveals nothing short of a “quantum leap” in small business optimism.
“This increased confidence, coupled with positive investment and recruitment intentions, is a real vote of confidence in the current direction of the UK economy,” he said.
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