A SURVEY of more than 1,000 businesses in Hampshire and Thames Valley has found they overwhelmingly approve of the Government’s spending cuts – despite making them worse off.

The research by Southampton accountant and business adviser James Cowper found that more than eight out of ten businesses approved of the cuts.

But four out of ten said they will have a direct and negative impact on their business.

Some 63 per cent of businesses surveyed believed the cuts will lift the country out of recession, yet just 27 per cent think they will benefit directly.

And 96 per cent of businesses expect to see reduced revenues as a result of the cuts with 60 per cent of businesses stating that they do not expect any increase in business in the private sector.

The survey of businesses was carried out over one month immediately after the Government’s Comprehensive Spending Review announcement in late October.

Sue Staunton, a partner and head of the James Cowper’s business recovery and insolvency team, said: “This survey is interesting in that businesses recognise the need for the Government’s tough spending cuts and approve of the programme even though it is likely to leave them worse off.”

One quarter of businesses said that they have been directly affected by the cuts announced by the Government so far. Of those affected, one third have made redundancies and 22 per cent are reducing or freezing salaries. Two thirds of those affected are cutting other overheads.

Ms Staunton added: “One of the more worrying aspects to come out of this survey is the lack of communication from public sector customers and clients of those surveyed.

“Nearly 60 per cent of those surveyed said that they had received no communication at all from the public sector customers. The public sector has known that these cuts were coming and by keeping suppliers in the dark it means businesses will find it difficult to prepare for a dramatic drop in revenue.”

The survey found that 36 per cent of businesses have had contracts with the public sector trimmed down, and 20 per cent had contracts cancelled or not renewed. The 1,000 businesses in the James Cowper survey were drawn equally from Oxford, Reading, Newbury and Southampton.

Fareham MP and financial secretary to the Treasury, Mark Hoban, said: “Returning the UK to sustainable economic growth is the Government’s overriding priority.

“As Hampshire businesses recognise, tackling the deficit is unavoidable, because healthy public finances are essential for jobs and growth, and the Budget and Spending Review put the public finances and spending on a sustainable footing.

“This is helping to keep long-term interest rates low and encourage businesses to invest and grow. The sovereign debt pressures in Europe show why the Government’s plan is the right one. “The Growth Review further sets out how the Government will create the conditions for private sector growth, building on the action it has already taken.”