By Maximilian Clarke

Half of UK business owners are worried that a eurozone collapse will negatively affect their business, a survey suggests.

With Italy and Greece looking ever more likely as candidates to leave the euro currency block, this could mean further woes for Britain’s 4.8 million small businesses.

Fifty-five percent of small business owners surveyed by small business services provider, XLN, said they thought a disintegration of the euro currency block would lead to decreased sales for their business, while just eleven percent saw it as an opportunity to increase sales. Thirty three percent thought it would have no effect on their sales.

“Our survey shows small UK businesses are extremely anxious about the next 6 months,” said Christian Nellemann, founder and CEO of XLN. “Although most small businesses will not be hit directly, owners are worried because the breakup of the Euro currency area would near guarantee the UK falling into another recession.”

“In the short term, government decisions affected by a euro collapse could also directly affect small businesses in terms of availability of credit, taxation and consumer spending,” added Nellemann. “I hope the government will consider additional help and support aimed at small businesses if the situation in Greece and Italy worsens.”

The first part of the survey looks back over the last 6 months and asks small to medium-sized enterprises (SMEs) to rate factors surveyed affecting their business such as number of customers, price inflation, profits and more out of a maximum 10 marks, with a high score being favourable. The combined average response this time was 4.45/10, compared with an average of 4.34/10 in the previous survey. This means businesses are slightly more positive about their actual performance than they were last time. In particular there was a marked improvement in the score for price inflation from 3.85 to 4.22, meaning that small business owners believe price pressures seem to have eased slightly.

A second part of the survey looks forward over the next six months and measures how positive businesses are about the same factors, but as they expect them to be in the future. The overall score for this forward looking measure dropped from 4.29/10 last time to 4.26, meaning small businesses are now more pessimistic about their prospects than they were three months ago. In particular, the forward score for availability of credit such as bank overdrafts and loans dropped from 3.67 to 3.33, meaning business owners are even less confident at being able to secure credit than they were last time, despite government bank targets that have been set to increase SME lending.

Finally, the survey also asked about the current government’s performance with regard to small business issues. Business owners rated the government with regard to new regulations for small businesses an average of 3.42/10. The government was also hit by criticism of taxation of small business, with owners rating them a poor 2.54/10 on this measure.

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