By Claire West

Job creation remains muted as businesses are cautious about the strength of the recovery and concerned about a double-dip recession, according to the Federation of Small Businesses (FSB) latest 'Voice of Small Business' Index published today.

The survey of 1,304 FSB members, found that 10.4 per cent of firms expect to decrease employment over the next three months as business confidence in future prospects and revenue growth weakened over the July to September period.

While the economy continues on its slow path of recovery, business confidence over the third quarter continued to decline further, in Northern Ireland (37%) and Wales (17%) and for firms in the service sector.

The net balance of businesses expecting an improvement in prospects over the next three months has been on a steady decline since the start of the year, from 16.2 per cent at the end of quarter one, to 4.2 per cent in quarter two and now just 0.5 per cent at the end of quarter three.

More than a third (38.1%) of respondents also reported a decline in revenues in the three months to September, suggesting that economic recovery is far from robust.

John Walker, National Chairman, Federation of Small Businesses, said:

"Small businesses are now at tipping point and are looking to the Government for a growth strategy to go alongside the inevitable pain from the Comprehensive Spending Review, due later this week.

"The FSB has called for a Programme for Growth to help support the employment potential of existing firms as the axe falls. Coupled with the spending cuts is the impending 2.5 per cent rise in VAT in the New Year, a cost which small firms will not be able to absorb.

"The Government is looking to the private sector to create jobs and take on the people that will be made redundant as a result of the cuts. Evidence from this report shows that small firms do not have the confidence to do that yet and so we urge the Government to ensure that the right measures for firms to grow are laid out."