Small firms fear they are on the edge of collapse

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NEARLY a sixth of small businesses in Britain fear they are at “high risk” of going bust in the next 12 months, according to a survey by insurance provider Zurich.

More than a third of construction firms are teetering on the brink, while a quarter of IT firms are worried about their future and a fifth of retailers expressed concerns.

Just under 80 per cent of the 562 businesses questioned said that the “current economic climate” was holding them back, with a similar percentage worried that the economy will not improve during the coming months.

Richard Coleman, director of small and medium-sized enterprises at 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.”

News of the survey’s findings came a day after the British Retail Consortium warned that shops are closing at a record rate and that the situation is expected to get worse in the months ahead after Blockbuster, HMV and Jessops slipped into the hands of administrators.

Earlier this week, the Scottish Chambers of Commerce warned that the key services sector will remain in the doldrums this year, despite signs of recovery in manufacturing and construction.

The chambers said that the important retail and tourism sectors are coming under pressure from a lack of consumer spending.