According to research published this morning from invoice finance provider Bibby Financial Services' Business Factors Index, 37% say they are finding the current trading climate tough, while more than a half (58%) reveal they have been forced into rationalising their business and making cuts.
The findings serve as a stark reminder that the downturn is far from over, with Bibby Financial Services' corresponding report from 12 months ago revealing that 89% of businesses from the sector believed they were doing better or about the same as the previous year.
And, the economic climate appears to have done little to restore confidence among the business services sector with more than three-quarters (68%) fearing the UK could take up to three years to recover from the effects of the downturn. The figures corroborate findings from the CBI, whose latest economic forecast reveals the economy expanded only slowly in the second quarter of this year and warned that the UK is likely to experience slow growth in 2011-2012.
The Index -which tracks the turnover levels among nearly 4,000 of Bibby Financial Services' UK client-base alongside the outlook of 450 business owners across the UK - found that four out of 10 firms say they remain hopeful and confident about the trading year ahead, while eight out of 10 firms have reported an influx of new customers and enquiries. However, 40% believe banks could be doing more to stimulate an economic turnaround, principally by loosening lending criteria and making credit more available.
A number of businesses in the sector are calling on the Government to lead the recovery, including almost a quarter (23%) wanting a focus on increased public spending to fuel business confidence.
Sharon Wiltshire, recruitment spokeswoman at Bibby Financial Services, says: "Firms operating in the business services sector have not escaped the clutches of the recession, with the downturn having had a significant impact on firms' recruitment strategies, domestic and commercial property prices, consumer confidence and banks' willingness to lend money.
"But the fact there is no end in sight to the planned cuts in government expenditure, increased tax, fuel and rising inflation means firms will continue to be placed under significant pressure. The upshot of these, together with the adverse impact on cash flow, suggests many from the sector could be in for a rough twelve months.
"It is therefore more important than ever that they have access to the necessary funds to maintain a healthy cash flow and embrace new opportunities as and when they arise. Invoice finance can help them do exactly this and we are passionate about supporting businesses with specialist solutions to alleviate cash flow worries with a reliable source of finance."
