Smaller firms are expecting a tough year despite recent growth in overseas orders, a new report says.
The study, conducted by the Confederation of British Industry (CBI) found that SMEs saw their output grow in the last quarter of 2007, partly due to strong overseas orders, but expect a tough start to 2008.
Out of those surveyed 78 per cent said a lack of orders was likely to limit their output in the next three months.
It added that many SMEs were also finding raising costs of raw materials is putting increasing pressure on profit margins.
However, despite this increasing economic uncertainty small manufacturers expect employment to remain stable in the coming year.
Russell Griggs, chairman of the CBI's SME council said: "Firms, especially the smallest, are no longer able to absorb rising input costs and, even with fears of weakening demand, are now being forced to raise prices."
In related news the Federation of Small Businesses recently slammed the tax burden the government had placed on SMEs.
