Two-thirds of small firms believe their survival remains under threat but business confidence in the sector has improved, according to a new survey.
The second quarterly survey from representative body Isme found that 43 per cent of firms planned to reduce staff numbers over the next 12 months while three out of four reported a fall in sales.
It found no improvement in business conditions during the second quarter among the 600 firms surveyed but did note an improvement in business confidence with a net 56 per cent of companies less optimistic, in comparison to a net 71 per cent in the previous quarter.
This is a higher reading than in the first quarter and is also an eight-fold increase compared with the same period last year.
A strengthening in the value of sterling in recent months has provided some comfort for exporters. According to the report exporting firms said the value of their exports was one third lower in the second quarter, compared to a reading of 43 per cent in the pervious quarter.
When asked to rank their most immediate business concern, the ongoing economic uncertainty emerged as the main worry.
ISME head of research, Jim Curran said: “The latest survey figures confirm that even though smaller businesses are more optimistic there is little evidence of green shoots in the sector. In fact the second quarter has proven to be more difficult than the first quarter with a noticeable deterioration in sales, employment and investment”.
He said the report suggested small businesses were continuing to downsize, with companies planning to reduce employment numbers and investment levels over the next number of months.