Small and medium-sized manufacturing firms report a further fall in business confidence, with small firms less confident than medium-sized companies, according to a Confederation Of British Industry (CBI) survey published on Monday.

Fifteen per cent of small and medium-size firms (SMEs) said they were more optimistic about their general business situation while 43 per cent were less. The balance of minus 28 per cent compares with minus 30 in April. Replies from small firms showed that 12 per cent were more optimistic and 45 per cent were less optimistic. The balance of minus 33 compares with minus 32 in April.

Simon Bartley, Vice-Chair of the CBI’s SME Council, said: “SME manufacturers are facing extreme pressure from the global slowdown. They continue to experience falling orders whether they are suppliers to larger UK manufacturers or directly to US or international companies. Although the latest cut in interest rates may avert further declines in confidence, SMEs are reliant on an improvement in the global market for an upturn in business and an increase in investment.”

Employment in SMEs continued to fall and at a quicker rate than was predicted in the April survey. Both small and medium-size firms expect the numbers they employ to decline further over the next four months. However, these reductions are more moderate than reported among manufacturers as a whole.