By Jonathan Davies

Businesses owners are less confident in the economy ahead of the general election, according to accountants Smith & Williamson.

The Smith & Williamson Enterprise Index fell from 106.8 in the final three months of 2014 to 104.4 in the first quarter of 2015.

“This drop appears to reflect uncertainty in future stability in the light of a range of political and economic factors. These include Euro depreciation, the threat of “Grexit”, oil price volatility, geopolitical implications and the continuing unrest in Ukraine and the Middle East. These add to home-grown uncertainty in the face of a finely balanced UK general election with concerns about the impact on the economic recovery and the longer term prospects for business,” said Guy Rigby, head of entrepreneurial services at Smith & Williamson, the accountancy and investment management group.

Businesses seek responsible economic policies

With the general election just around the corner, the Smith & Williamson Enterprise Index asked respondents whether they thought businesses' long-term interests would be better served by eliminating the deficit through spending cuts, or increasing public sector borrowing. Giving a real indication of business sentiment ahead of the election, 65% of those surveyed indicated their belief that businesses' long-term interests would be better served by plans to eliminate the deficit, in line with current policy.

This can be compared against one of the Index’s core questions, which asks whether or not the economy will improve over the next 12 months. A strong majority of 71% respondents said they expect the economy to improve.

Flexible working becomes a battleground

The majority (78%) of business owners agreed that increasing flexible working opportunities is essential in the war for talent. This suggests that they either already offer flexible working or believe that they must implement it to be able to attract and retain the best talent.

In December, following research by the Centre for Economics and Business Research (Cebr) and software company Citrix, which suggested that flexible working could boost the economy by £90bn, Jacqueline de Rojas of Citrix, called for a “mentality shift” amongst UK businesses. She said that “it is time to move on from judging workers on how long they spend at their desks, to evaluating them on the work they actually deliver”.

“Those that choose not to enable workplace mobility will lose out in the war for talent.”

Cyber security

Following a number of high-profile cyber-attacks, the Enterprise Index asked respondents whether they agreed that businesses need to increase their investment in cyber security. Nearly three quarters (74%) agreed that cyber security needs additional investment by businesses.

“There were few absolute detractors, indicating that this topic will feature prominently on future boardroom agendas. Business thrives on confidence and is threatened by global uncertainties. It seems that the volume has been turned up and the sheer number of these challenges is currently our biggest threat,” explained Mr Rigby.