Small companies fear being squeezed out of the market by larger chains, according to new research from Lloyds TSB Business.

Nearly half the small businesses surveyed (46%) cited competition from national companies and high-street chains as their most pressing concern.

Increasing tax charges such as business rates were a worry for more than a third (38%), and the impact of the skills shortage on their businesses keep 36% up at night.

A third of those surveyed also expressed fears about the rising cost of labour.

Ben Pinnington of the Forum of Private Business, which counts hotels, B&Bs and restaurants, among its members, said getting good staff in rural and costal areas remained a huge problem.

"We believe business rates should be reduced for these business, which are dependent on tourism and acutely affected by rising labour costs," he said.

"The situation has been eased currently by an influx of Eastern Europe workers but this is only a temporary fix, and a reduction in tax would enable businesses to employ more UK workers."

By Chris Druce

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