Warning on 2011 business growth


Poor conditions on the high street caused by the wintry weather has held back the growth of small businesses

Business growth is likely to be “sluggish” at best this year after economic recovery in private firms lost momentum in 2010, according to a new study.

The Federation of Small Businesses (FSB) said a survey of more than 1,500 firms showed that the severe weather last month coupled with the increase in VAT at the start of the new year had an impact on business confidence, especially those in restaurants, retail and transport.

Confidence fell for three successive quarters to the end of 2010, said the FSB, which called on the Government to bring forward plans for growth.

FSB chairman John Walker said: “A number of pressures on small businesses are beginning to come to a head, such as the increase in VAT and fuel duty, placing more strain on cashflow.

“This combined with the severe weather at the end of 2010 has meant that small firms are not as confident about their prospects in 2011.

“With inflation above target and the labour market still weak, small firms cannot rely solely on the consumer for growth in 2011.

“It is imperative that the Bank of England base rate is kept at 0.5%, as once the impact of the VAT rise is excluded, inflation is relatively low.”

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