A new survey suggests that government regulations and paperwork have become greater concerns for small businesses in the last two years.

The views of small businesses have been tracked by the Natwest SERT/SBRT Quarterly Survey of Small Business in Britain during this period and reveals that almost a fifth (19 per cent) felt that regulations and red tape were the biggest barrier to their growth and success during 2005. In 1986, only eight per cent of respondents cited this as a barrier to success.

Currently, only one per cent of small business owners feel that interest rates act as a barrier to their success and growth, with almost a quarter (24 per cent) feeling that they were in 1986.

Andrew McLaughlin, group chief economist at Natwest, described Britain's small businesses as the "engine room of the economy" and added that they were benefiting from a more stable economy which has lower interest rates and inflation.

He added, however, that both government and business had to work on reducing the burden of red tape and help to increase productivity.

"We have to maximise our profitability and output from the capacity that we have and it is not just about government – individual businesses must focus as well on what they can do to get costs down and profits up," he said.

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