Canberran businesses are facing closures as economic gloom hits the capital in the lead-up to the federal election in September.
Public service cuts and concerns over further job losses are hitting local businesses, according to acting chief executive of the ACT & Region Chamber of Commerce & Industry Greg Schmidt.
Mr Schmidt said Tuesday's federal budget failed to deliver on expectations for the business community, leaving struggling businesses in a worsening position.
''Some businesses are already in trouble,'' he said. ''Some businesses are closing down because of the overall economic conditions. We expect that unfortunately conditions for business will actually get tougher as the year goes on.''
Mr Schmidt said public service cuts outlined in the budget would also have a flow-on effect to Canberra businesses. ''Any time there are cuts to jobs in the public sector, that has a disproportionate effect on the ACT community compared to other states and territories,'' he said.
''It means there are substantially fewer people with money in their pockets and that has an immediate effect on retail and a flow-on to the whole ACT community.''
Mr Schmidt said business confidence, already low in the capital, was likely to deteriorate further in the lead-up to the September vote.
''As the election gets nearer, it's likely that business conditions will get tougher,'' he said.
''We're seeing increased costs being imposed on employers through the superannuation levy guarantee and other imposts. There's really no change to the benefit of small business in the ACT and there are going to be additional expenses.''
Previous public service cuts of a similar size sent the ACT into recession, according to Canberra Business Council chief executive Chris Faulks.
Ms Faulks said the ACT was set to bear the brunt of $148.4 million in savings being chased through reductions in senior public servant wages.
''Forty per cent of the ACT's workforce is employed by the federal government,'' she said. ''But 62 per cent of the executive level and 76.8 per cent of the senior executive staff are located in Canberra.''
Ms Faulks said businesses were also suffering from the flow-on effects of efficiency dividends, which has hit businesses such as Iken Commercial Interiors.
Iken general manager Matthew Power said the ongoing dividends meant organisations were cutting costs outside wages and his business had suffered as a result.
Mr Power said Iken was competing against 30 other office furniture companies in Canberra, forcing the company to slash staffing levels to half of what they were two years ago.