MANAGING directors of small and medium-sized enterprises do not believe the predicted downturn in the economy will turn into a full-blown recession, according to the latest research by the Royal Bank of Scotland Commercial Services.

The research showed that 60 per cent of MDs questioned did not think there would be a recession this year.

In addition, 63 per cent said they were also optimistic that their business would continue to grow, while more than a third said they would be investing financially into the growth of their business.

Businesses were so positive that the researched showed that they would be increasing staff numbers - 28 per cent said they will be on a recruitment drive this year.

However, while the overall views of MDs are optimistic, a small percentage are putting in place plans to ensure that, if there is a recession, their business will be in a fit state to survive, with 38 per cent planning to restructure their business.

"Despite predictions among some economists that 2001 could see the start of a UK recession, SMEs disagree," said Peter Torrance, Marketing Director of the Royal Bank of Scotland Commercial Services.

"However managing directors do need to keep a close grip on their cashflow and should ensure that when they are making investments, that they don't overstretch themselves. They should consider using invoice finance to ensure a steady cashflow."