Economic uncertainty is leading to nearly half of small and medium sized enterprises (SMEs) sitting on cash instead of investing it, according to research by Venture Finance.
This means that the growth so urgently needed is failing to occur as they keep cash in the bank in case of future financial problems rather than investing it.
On average £190,000 of money not needed for the day-to-day running of businesses is being saved until the economy picks up.
Over a quarter of those surveyed said they had no plans to expand in the coming year with a third having no plans to grow at all.
Recent research found that SMEs face a credit rating lottery depending on who supplies their rating and what criteria they use.
Peter Ewen, managing director for Venture Finance, said: “If SMEs can shake off this cautious mood and grasp the increasing growth opportunities available, it could be a great boost for them and for the UK economy.”