Decline in exports puts pressure on small firms

HALF of struggling small businesses are having orders cancelled as concern mounts over the dramatic fall in exports and the weak sterling hits firms harder than it was firstanticipated.

Small and medium-size business group ISME said three out of four companies expect profits to plunge in the coming months, while almost half expect to shed jobs.

An ISME survey during the first three months of the year of 600 firms also found two out of three expect revenues to drop in the next 12 months.

ISME head of research Jim Curran said: “The indications are that the situation is going to deteriorate further and there is massive concern at the dramatic fall in exports, down significantly on the previous quarter.”

Half of small companies are employing fewer than this time last year and three-quarters said they are concerned about future business prospects. The most negative sectors are distribution and manufacturing, with 92% less optimistic, followed by construction at 75%, retail at 69% and services at 64%.

“The results of the latest survey confirm that the situation for SMEs is progressively deteriorating, with little or no respite in sight, due to current economic conditions. Clearly, the sector is struggling badly with sharp falls in turnover, sales, revenues and profits impacting negatively on investment and employment,” said Mr Curran.

ISME said the impact of a weak sterling is hitting business harder than previously anticipated, particularly as nearly half of all small and medium exporters export to Britain.

Mr Curran said: “As a significant number of companies have individuals on a three-day week, the likelihood is that many of these individuals will be let go over the next number of months, unless there is a dramatic improvement in economic conditions.

“On that basis, the recent budget was a missed opportunity, which did nothing to address the maintenance of employment. In fact, if anything, the budget details have only succeeded in making the problem progressively worse, with the tax measures in particular, restricting employers’ options on proposed pay cuts, leading to a further anticipated increase in redundancies.”

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