News

March 19, 2010

95 per cent of small firms not planning staff cuts

Small businesses are optimistic about the economic recovery, with just five per cent predicting the need for staff cuts in the next six months, research from HSBC has found.

The high-street bank's bi-annual Global Small Business Confidence Monitor, which surveys 6,000 small firms in emerging and developed countries, found that 95 per cent of UK small firms did not expect to make redundancies or reduce staffing levels in the next six months.

The survey also found that 25 per cent of UK small firms are planning to increase their capital expenditure during the same period, while 76 per cent expect to see GDP growth either stay at the same pace or increase.

HSBC's head of commercial banking UK, Noel Quinn, said small firms had played a "crucial" role in recovery and their optimism was extremely important. "By continuing their positive outlook, small firms will be able to step forward with confidence, make new plans and continue to prosper into 2010," he said.

The Confederation of British Industry (CBI) called the results "encouraging" and said improved export prospects were contributing to a more upbeat outlook for many small firms in the manufacturing sector.

However, the CBI said the labour market was still fragile with growth not yet sufficient to generate new jobs. "Recent figures showed a fall in unemployment but they also show that the number of people actually in work continued to fall, which is a concern," said CBI chief economic adviser, Ian McCafferty.

The Chartered Institute of Personnel and Development's senior policy adviser, Ben Wilmott, said that small firms which had adopted flexible working patterns during the recession were now under less pressure to reduce staff numbers.

"Job shares, flexible hours, short-time working and giving staff unpaid leave meant many firms were able to keep staff on, even during lean times," he said.

"Businesses now need to plan for the future," added Wilmott. "Employers need to communicate at all stages, and give positive messages that focus on the opportunities available at work as well as the challenges ahead."