Small business confidence in the South West has fallen for a second consecutive quarter bucking a generally more optimistic trend seen elsewhere in the UK.

The Federation of Small Businesses (FSB)'s quarterly confidence report is a regular snapshot of how small businesses are coping and the latest figures show that after a bright start to the year local confidence levels are now dropping further. And, as a result, the South West has plunged to the bottom of the regional league table for SME positivity.

General economic conditions was cited by nearly two thirds of respondents as the biggest barrier to growth in the South West with consumer demand and utility costs also contributing to the concerns as the cost of doing business crisis continues to grow.

In addition, more of the SME business owners polled in the South West say they will reduce staff numbers rather than increase them and 15 per cent of businesses told the survey they intend to 'contract' the business (to downsize, sell) in the next 12 months - a marked increase on the previous quarter.

FSB regional policy chair Craig Carey-Clinch said that the general tone of this quarter's report was worrying.

"Usually when we release these reports they offer quite a mixed picture on growth, investment, revenue and jobs but for this quarter most of the indicators are in negative territory and the overall headline confidence figure continues to be at a much lower level than we would want.

"Our report shows that small businesses are still clearly in an uncertain economic position and the fear is that as we are now heading for the crucial winter period there is little evidence that the growing nervousness around the SME community in the South West is set to quickly lift.

"It is important therefore that the Government and other key stakeholders do all they can to show their support for small businesses so we can try to get the economy working again and reverse these worrying trends for SMEs here in the South West."

The regional figures were released as part of the overall national FSB confidence report for the quarter which showed a generally more positive overall confidence picture than the South West with London proving the most optimistic of regions.

The FSB South West report can be downloaded here.