The performance of the small and medium sized enterprises had been badly affected by the global economic downturn. The major consequences of the recession suffered by SME sector in U.K are, decrease in number of SMEs, jobs, demand from customers, lack of investment, decrease in production, etc.
In 2009, the production growth of SMEs decreased by 5.5%, while lack of market demand was found to be a major problem by 28% of SMEs. The second major problem cited by SME owners is access to finance (19%) as the banks are now demanding higher risk margins and more collateral.
It was also seen that there was a decreasing trend in the number of SMEs in 2008. This is because of the number of business closures increasing rapidly. This has led to the burden of additional costs on the society. The number of jobs layoffs also increased. For the businesses to sustain, business dynamics have to improve so that it results in economic growth and job creation.