According to research from the Open University small business are struggling to to create new jobs.
The quarterly survey for the three months to June found that 67pc of small companies reported that their workforce has remained static over the past year, while slightly more of the remainder have shed rather than recruited staff.
However, the net balance of employers hiring staff was 1pc lower than those shedding employees, a marked improvement on the 9pc difference recorded in the previous quarter.
But Professor James Fleck, Dean of The Open University Business School, said: “Britain’s small firms are not yet in a position to lead a national drive for jobs.”
The overall level of optimism among owner-managers was down from last year, although several sectors saw increases in net sales balances over the quarter, the survey of 800 companies found.
Almost half (47pc) of small manufacturers experienced increases in sales. Their net sales balance – firms recording increased sales minus those saying turnover is in retreat – of 27pc is the best since mid-2007.
However, hotels and restaurants, construction companies and small retailers all reported negative sales balances, with small retailers apparently suffering the most, with a net sales balance of minus 26pc.
In a discussion on small retailers on the Club forum, John Endacott, tax partner at accountants Winter Rule, said: “We are seeing real problems on retail clients and rents are out of all proportion to the income generated.
“Landlords will have to reduce rents. However, if and when rents do come down, the next issue will be the impact on pension schemes as owners of retail space.”
Order times for customers are becoming stretched, he added, as “orders are held back because the retailer can’t afford to place [them]”.
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