Rising costs and fears over the state of the economy are causing 50,000 small businesses to close down their offices each month, according to new research.

The study, conducted by O2, found that 13 per cent of small companies have not renewed a lease on business premises in the last eight months and have instead chosen to work remotely.

It found that 62 per cent of firms stated they had done so in order to cut costs.

Simon Devonshire, head of O2 SME marketing, said: "Getting rid of the office relieves many small businesses of a major overhead very quickly and shows a rapid response to current economic pressures."

Recent advances in technology mean that operating a business from home is now a realistic proposition for many people, he added.

Recently, Frances Coulson, a spokesperson for business recovery firm R3, warned that firms considering setting up a virtual office should take into account the fact that staff members might feel isolated if they do so.

RELATED ARTICLES:

• SMEs 'need £1bn government fund'
• Budget 'must help SMEs'
• Post Office contract 'will boost small firms'
• Lord Mandelson 'will look at how banks lend to SMEs'
• Tax breaks 'should boost SMEs'