Awarding more government contracts to small firms could help boost the economy, it has been claimed.

In news which might be of interest to business insurance customers, John Wright, national chairman if the Federation of Small Businesses (FSB), believes that state contracts can offer a boost to SMEs.

However, he also thinks that small firms face "significant barriers" when it comes to bidding for such deals.

"Without government support, small businesses are put at a disadvantage. We need to see actions implemented so we can ensure that SMEs are represented fairly when tendering for government contracts," he said.

Research conducted by the FSB, the British Private Equity and Venture Capital Association and the Confederation of British Industry, found that almost 75 per cent of small firms never bid for government work.

It also found that more than half of SMEs feel the tendering process requires too much time and effort for them to be able to respond effectively.

Yesterday, a survey by the Institute of Chartered Accountants in England and Wales found that 83 per cent of firms are still targeting growth this year, despite the economic downturn.

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