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Political stalemate is impacting SME confidence

Simon Quicke

The on-going uncertainty over who is going to be running the country is having an impact on business confidence in the SME sector.

Since last Thursday's general election the results have produced a hung parliament with the Liberal Democrats holding discussions with both the Conservatives and Labour with a view to forming a coalition government.

But as those discussions have dragged on, with some signs there might be a breakthrough today, the impact on SMEs has been considerable according to a survey from the Federation of Small Businesses.

The FSB survey taken over the last three days shows 54% of small firms will not move forward with plans to expand following the results and 49% want another election in six months.

Just over half of those quizzed said they lacked confidence in the economy and there were calls from significant numbers for the eventual government to cut the deficit and get tougher on the banks.

"These figures worryingly show that small firms have lost confidence in the economy following the outcome of the election just as the business community was beginning to recover from the downturn," said John Walker, national chairman of the FSB.

He added that the FSB was calling on whoever came into government to make renewed efforts to stimulate growth in small business and help SMEs get access to funding.

The FSB has not been alone in highlighting the dangers to the small business sector and straight after the result became official last Friday other business groups were also warning of the impact of a hung parliament and its impact on confidence and the recovery.

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