The credit crunch is likely to get worse before it gets better, it has been claimed.
Highlighting a study by the Small Enterprise Research Team (Sert), the Forum of Private Business (FPB), warns that it is clear SMEs are pessimistic about their outlook.
According to the research the proportion of respondents expecting an increase in sales fell from around 35 per cent in the first quarter of 2003 to almost 0 per cent in the same period of this year.
Phil McCabe, spokesperson for the FPB, said: "It is clear from this Sert research that small firms are feeling vulnerable and less optimistic about the future.
"The research also highlights the growing feeling among smaller businesses that the endless amount of paperwork they have to process is a significant barrier to growth."
Because of this, the government should offer support to small firms by removing the burden of red tape, he added.
Meanwhile the British Chambers of Commerce has stated that an increase in interest rates would damage the economy.
