Entrepreneurs start to feel public sector ‘pain’ – report

NINE months on from the comprehensive spending review, entrepreneurs consider public sector cuts to be the biggest threat their businesses face, new figures suggest.

According to accountancy and business advisory firm RSM Tenon’s Business Barometer, a quarterly survey of senior management in small and medium sized enterprises, found that in the North 19% cited public sector cuts as the greatest threat their businesses faced.

Almost a fifth (18%) of entrepreneurs nationwide view the slash in government spending to be the greatest danger to their company.

RSM said this figure is significantly higher than a year ago when just 13% cited public sector cuts as the biggest threat, while both lack of cash flow and failure of government to address national debt were considered more pressing issues.

Liam Cotter, corporate recovery director at RSM Tenon’s Leeds office, said: “These figures highlight how the ripples created by the comprehensive spending review are beginning to reach all parts of the UK’s economy. Directly or indirectly, public sector cuts affect almost everybody.
 
“Many firms who supply publicly-funded bodies are losing contracts and the problem is that SMEs do not have the size or cash reserves to support the major cost-cutting initiatives that many blue chip corporations can struggle though, so they are less equipped to deal with shocks such as the comprehensive spending review.”