Tax and Red Tape the top two small business concerns

Government regulations and the total tax burden are now the top two problems facing Britain's small firms, according to the latest NatWest Quarterly Survey of Small Businesses. Whilst the impact of government regulations has been the number one problem for 18 months, the tax burden has now jumped into second place for the first time in 3 years.

Tax is a particular problem for businesses in the health, education and leisure sectors (20%) and those running hotels or restaurants (18%), possibly due to duty on alcohol. For the smallest firms in the survey however, the lack of hours in the day to complete their required workload remains their greatest concern.

The good news for small businesses however, is that the general economic climate, which was top ranked problem for most of 2003, is now only fifth ranked and is no longer a top problem for any industry sector. Optimism about the future is also good, with sales and employment both expected to improve in the coming months.

Small firms in the West Midlands and in Wales are currently the most optimistic about their future prospects, with both reporting a great improvement in their employment, sales and investment outlook.

The ability to recruit employees with the required skills remains a burning issue for many small businesses, particularly construction firms, where 25% report that this is the biggest single problem facing them.

Pete Ferns, Director of NatWest Business Banking, said: "Small firms are clearly still feeling the pressure when it comes to dealing with government regulations and it is concerning to see the shift in opinion regarding the total tax burden. That said, with the improved economic condition and the optimism about sales and employment, the future looks bright for the UK's small business community."