Business Distress Index shows many SME owners don't believe economic news

6 September 2013

In the survey data "Business Distress Index" commissioned by R3, the insolvency trade body, 49% of SME owners do not believe in the positive economic signals trumpeted by the Chancellor.  The survey was conducted in the first 2 weeks of July so even since then there have been significant further indicators. The idea that the economy had moved from "rescue to recovery" was believed more by larger businesses (55%) than by smaller businesses (49%). Ok, the sample size of 501 businesses isn't huge but it indicates that people are yet to be convinced of the recovery.  It should also be remembered that these are mostly surveys rather than hard economic data that is driving the current optimism,  with the exception of house prices perhaps! The Business Distress Index also reported that the number of businesses that are reporting one or more signs of distress has fallen from 40% in March to 35% in July.  Back in July 2012 over 50% of company owners reported one or more signs of distress.Liz Bingham, President of R3, commented;  “Having experienced a number of  false dawns in recent years, there is an understandable reluctance on the part of business to herald the recovery, although larger businesses appear more willing than their  smaller counterparts to do so."