Capital gains tax changes will deter investment and damage enterprise culture, according to research by the CBI.

The research revealed that only 12% of firms surveyed had already experienced a deterioration in the availability of capital, but that 22% expected some constraint over the next three months and 31% over the next 6-12 months. Overall, some 35% are either experiencing, or expect to experience, some deterioration.

It found that 19% of the firms questioned said credit tightening was currently affecting or was expected to affect business decisions and plans. Of this fifth, 34% said they are cutting output or stock levels, 29% are trimming capital investment (and a further 25% postponing investment plans), while 26% are cutting jobs or recruitment plans.

Ian McCafferty, CBI chief economic adviser, says: "The credit crunch has not caused funding to small firms to dry up, and the bulk do not think they will be affected.

"However, a minority are feeling the pinch and have started to scale back business plans, whilst more expect the situation to worsen.
"These businesses are concerned that over the coming year credit will cost more and lending conditions will tighten. There will clearly be a knock-on effect on investment, jobs and the wider economy, but the overall impact is still likely to be limited."

The survey targeted the owners, chairmen and directors of 500 small and medium sized enterprises (SMEs) across all sectors, and sought to confirm anecdotal evidence on the impact of the credit crunch and the proposed changes to capital gains tax.