The majority of small business owners in Sussex believe the biggest challenge facing them in the coming year will be coping with red tape.

The finding comes from a survey by Crawley-based Bibby Factors Sussex.

This showed 70 per cent of firms expected to be bogged down with bureaucracy, an increase of 22 per cent on last year, with more small firms than ever worried about the effect it will have on business.

This is despite attempts by the Government to introduce legislative changes to reduce red tape.

Sixty-one per cent of firms in the county said the second big-gest challenge they faced was finding skilled employees, suggesting little had been done to address the skills gap in the South-East.

The survey found owners and managers were concerned about finding new markets for their products and services, a sign they were looking at ways to offset any potential downturn by targeting different markets.

Sales director designate Ian Burman said: "These results are perhaps not surprising given the huge difficulties faced by owners and managers last year and the slowdown in the worldwide economy.

"Small business owners and managers are understandably feeling cautious about trading prospects for the coming year given the experiences of last year.

"Red tape is still one of the biggest challenges facing Sussex firms, particularly at a time when small businesses and entrepreneurs thinking of setting up on their own should be encouraged and not stifled by bureaucracy."