Small firms may struggle to cope with the current economic slowdown, it has been suggested.

According to Lai Wah Co, head of economic analysis at the Confederation of British Industry (CBI), whereas if some parts of larger firms are badly affected there may be other parts doing better, small companies are likely to operate in one niche area.

She said: "For a smaller company, the likelihood is you specialise in one type of business and, therefore, if business is down or demand has fallen back there is unlikely to be any offset anywhere else."

According to the CBI’s latest economic forecast for the UK, gross domestic product growth next year will be pushed down to the lowest rate since 1992 by a combination of rising commodity costs and weaker consumer demand.

The CBI aims to help create and sustain conditions in which businesses can compete and prosper.