Small business fears growing red tape

ALMOST three-quarters of Scottish entrepreneurs expect the regulatory environment for small to medium-sized enterprises (SMEs) to become more - rather than less - of a burden over the next three years.

The survey findings from the Bank of Scotland's business banking unit coincided with the latest figures from the bank's Small Business Confidence Index, which revealed that confidence levels among Scotland's businessmen and women had slipped by four points during the third quarter of the year.

In addition to expectations of an increased regulatory burden, 59 per cent of entrepreneurs in Scotland believe the need to comply with regulations is preventing their business from maximising its performance.

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More than two-thirds of Scotland's entrepreneurs agree with the recent complaint of the CBI's director-general, Richard Lambert, that "red tape and regulation only serve to dampen entrepreneurial flair".

Nearly the same percentage also believes the UK implements European rules more aggressively than it needs to.

Mark Curran, head of Bank of Scotland Business Banking, said that, while the index score had dipped over the past quarter, confidence among small business owners was still strong, particularly when it comes to assessing their own growth prospects. "The majority of small business owners are still working at near to full capacity with a strong demand for services from their customers," he explained.

"However it is worrying to see that, despite demonstrating such strong self-belief, so many of these businesses continue to feel the pressure of regulation compliance. Whilst there clearly is a requirement for a certain level of regulation, the ever-increasing burden of red tape appears to be weighing heavily on the shoulders of SMEs."

In line with the recent dip in market conditions, confidence among entrepreneurs across the whole of Britain has slipped two points from 48 to 46. With optimism varying more by location than sector, only small businesses in the south-east of England and the east Midlands have witnessed a rise in confidence, while Scotland has seen a four-point decline from 51 to 47.

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