Small business more confident over future

Confirmation that the recovery is filtering through to the lower reaches of the economy comes today in a survey showing small and medium-sized businesses at their most confident for more than 18 months.

Optimism about both their own prospects and the general political and business climate has risen for the third quarter in a row and now stands at the level it was at in the first-half of last year, according to the latest three-monthly poll of its portfolio by 3i, the venture capital group.

The 3i enterprise barometer now stands at 70 for the August quarter, up from a low hit in October last year, when the confidence indicator showed a reading of 17. It has not been as high as the current figure since February 1995, when it stood at 108, but it was then on the way down. It is the first time since January 1994 that all areas regularly measured by the survey have increased.

Charles Richardson, director of corporate affairs, said: "Businesses are seeing increasing demand for their products. I think that's what's really encouraging them." But he said that there was more confidence that the economy is set fair for the next few months. "The indicators are moving in the right direction, with the election a few months away. The consumer is more confident and exchange rates are staying pretty stable."

Professional investors have become less bullish about the near-term prospects for global equities markets, according to the Merrill Lynch survey of UK fund managers. They are most bearish about the US and least pessimistic about continental European markets.