Small firms 'experience dropping operating costs'
Commercial insurance
22nd June 2009
The UK's small businesses have witnessed a fall in operating costs as a result of recent levels of deflation, it has been reported.
According to the Business Inflation Guide (BIG), developed in association with Warwick Business School, the cost of running a small enterprise has dipped by 1.4 per cent during the first three months of 2009, the second quarter in a row that costs have contracted.
The BIG stated that labour, advertising, raw materials and vehicle costs have all dropped, although profit margins are still under pressure as a result of lowering demand for products and services.
Stephen Roper, professor of enterprise at Warwick Business School's Centre for Small and Medium Sized Enterprises, explained: "Looking forward it is genuinely quite hard to predict which way the small business economy will move over the next year."
However, he added that he thinks it unlikely that there will be a return to "the very sharp inflation we have seen".
Meanwhile, recent data from Warwick Business School's Industrial Relations Research Unit suggested that job loss announcements have fallen in the UK during recent months.
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