Small firms not yet in a position to create new jobs

Smaller businesses are beginning to recover from the economic downturn but aren't yet strong enough to take on new members of staff in substantial numbers.

That was one of the findings of a new survey by the Federation of Small Businesses (FSB) in a week when the UK's unemployment figures broke the 2.5 million barrier.

The survey took in over 1,400 FSB members. Of those, 63 per cent reported they planned to keep employment levels on hold over the next three months.

This, the FSB said, suggests that many small firms are not yet ready to take on more staff. 

According to the survey, small businesses are showing signs of steady growth as the economy moves into recovery, with a net balance of 16 per cent of respondents saying that they anticipate that their business performance will improve over the next three months. 

However, 23 per cent are expecting their business situation to worsen over the next quarter, while two out of five believe there will be no change in the performance of their business.  

John Walker, the FSB's national chairman, said: "The rise in unemployment confirms that the economy is still too fragile for small businesses to take on new staff.

"The FSB Voice of Small Business Index shows that small firms are at the heart of the recovery but still need support if they are to get us firmly on that road to recovery and if they are to begin taking on staff again. 

"The FSB is calling for a renewed economic stimulus to help small businesses continue to create jobs, get access to crucial finance, innovate and start up new businesses, to get us squarely on the road to recovery."