Rise in number of firms who fear going under

The high street’s recent woes appear to be affecting confidence, with 21 per cent of retailers now claiming to be at high risk of going out of business, an increase from 12 per cent in the last financial quarter.

Similarly, 24 per cent of IT and telecoms-related SMEs say the same, also up from 11 per cent in the third quarter, and the figure rises to 37 per cent for construction firms, from 33 per cent previously.

The latest quarterly SME Risk Index from insurer Zurich, and polled by YouGov, surveyed more than 500 senior SME decision makers.

Richard Coleman, director of SME, Zurich, said: “There’s no doubt that it’s still tough out there for UK SMEs, and these figures seem to indicate rising levels of concern, as increasing numbers of businesses appear at risk of succumbing to financial pressures – particularly in vulnerable sectors such as retail and construction.”

More than three quarters of SMEs surveyed continued to raise concerns about the current economic climate, and 82 per cent said they are not confident it will improve in the next quarter. This came as figures showed yesterday that the country’s gross domestic product (GDP) fell 0.3 per cent in the fourth quarter, sharper than a 0.1 per cent decline forecast.

Of those SMEs who reported increased turnover in the last year, the most common measures used in the past two years to balance risk and growth include: implementing tighter financial and operational governance controls; hiring skilled staff to manage the operational challenges; and reviewing insurance coverage arrangements.

Mr Coleman said: “What is clear from our Risk Index results is that a key factor in surviving and achieving growth is being able to strike a careful balance between taking necessary risks on the one hand, and then overcoming and preparing for risks on the other.”

He added: “While 2013 will certainly be a challenging year for the UK economy, it is fantastic to see some SMEs already looking to expand and hire staff. With SMEs at the heart of our economy, we must make the most of these positive signs if we are to return to more stable growth patterns.”