Small Firms Fearful Amid 'Two-Speed' Economy

A new study indicates the emergence of a 'two-speed' economy, with small businesses expressing significantly more gloom than their larger counterparts. Data from Barclays reveals that only 12 percent of companies with fewer than ten staff believe current conditions favor long-term growth.

In contrast, two-thirds of the largest employers surveyed reported optimism about long-term growth prospects. This divergence is also reflected in borrowing patterns, with small firms increasingly using costlier short-term overdrafts.

Larger firms, however, have seen an 8.7 percent rise in longer-term borrowing, suggesting ongoing investment despite economic uncertainty. The research, based on a million UK corporate clients, highlights intense cost pressures affecting nearly all businesses, leading to price increases.

While elevated energy bills trouble all sectors, smaller businesses appear to be operating with greater caution. Despite these challenges, many smaller firms still perceive the UK as a viable environment for innovation and expansion.