A record number of small business owners are planning to close their firms over the coming twelve months, putting the UK on course to lose a quarter of a million businesses, according to the latest SBI.
- Quarterly Federation of Small Businesses (FSB) Small Business Index (SBI) shows confidence at second lowest ebb in report’s ten-year history.
- One in five firms reduced headcounts in three months to December; one in seven expect to do so this quarter.
- Share expecting profits to fall over next three months hits all-time high, with exporters feeling the strain as new EU-UK trade deal beds in.
Close to 5% of the 1,400 firms surveyed for the study say they expect to close this year. The figure is at an all-time high for the study, which launched in the wake of the financial crash, and is more than double that recorded at the same point 12 months ago. There are 5.9 million small firms across the UK according to the Department for Business, Energy and Industrial Strategy (BEIS).
The UK SBI stands at -49.3, down 27 points year-on-year. The reading is the second-lowest in SBI history, second only to that recorded in March 2020. The vast majority of those surveyed (73%) expect their performance to worsen over the next three months.
Close to a quarter (23%) of small firms in the UK have decreased the number of people they employ over the last quarter, up from 13% at the beginning of last year. One in seven (14%) say they’ll be forced to cut numbers over the next three months.
The proportion of small businesses forecasting a reduction in profitability for the coming quarter has spiralled over the past year, rising from 38% to 58%. The figure is at an all-time high.
Almost half (49%) of UK exporters expect international sales to drop this quarter, up from 33% at this time last year.
FSB Wales Policy Chair, Ben Francis, said:
“The worrying results in this survey make clear the need for Welsh and UK Government to step up their efforts to support small firms or risk losing thousands of great, ultimately viable small businesses, at huge cost to local communities and individual livelihoods.
“Company directors, those in supply chains, and those without commercial premises are still largely being left out of support. FSB has called on the UK Government to institute a Directors Income Support Scheme in order to help these business owners who have spent the last 10 months falling through the gaps of business support.
“In Wales, the business support landscape – though having introduced several welcome interventions for businesses – has become increasingly muddy and difficult to navigate.
“FSB Wales has called for Welsh Government to commit to fixed levels of funding attached to Alert Levels, which should be automatically paid for every 4 weeks that a business is subject to that Alert Level. This would provide businesses with some certainty that they can rely on a payment every four weeks in order to help them pay their bills whilst they are subject to significant restrictions or closure. Funding should be easy to access and apply for, and paid swiftly in order for money to reach the places where it will make a significant difference.
“On top of this, our exporters are trying to get across what a new EU-UK trade agreement means for them without the cash they need to make adjustments. Direct funding from UK Government to help them manage new obligations in the form of transition vouchers is urgently needed.
“UK and Welsh Governments can stem losses and protect the businesses of the future. But only if they act now.”