Small businesses braced for deflation

Date: 24th March 2009

Britain's small firms are bracing themselves for deflation, new statistics have revealed.

Figures from the Bank of Scotland show that one third of businesses expect that disinflation will turn to deflation in 2009, with a quarter of owners seeing this as a positive development due to potentially lower day-to-day costs.

Companies which are unsure of how deflation could affect their running should consider speaking with a trained financial professional, such as an accountant.

Commercial banking director at the Bank of Scotland, Donald Kerr, said that firms should be warned tumbling inflation is not always beneficial.

"Against a background of difficult trading conditions, the majority of companies are now being pushed by their customers to reflect these lower costs in lower pricing."

He added that managers would need to show "acute financial acumen" if they are to maintain their margins during the deflationary period.

Figures published by uSwitchforbusiness.com earlier this week revealed that three quarters of small businesses were confident of surviving the recession.