A recent survey from the Federation of Small Businesses predicts just under 5% of its members will close in 2021. With the government reporting some 5.9 million small businesses in the UK, this means we could be looking at some 250,000 insolvencies over the coming period.
Some 1400 firms responded to the FSB’s survey, which also recorded 58% of businesses predicting an overall reduction in profitability, and nearly 25% of businesses having reduced the number of employees since the start of last year. 14% say they’ll be cutting numbers again within three months.
Insolvency expert Simon Renshaw of AABRS commented: “Clearly FSB’s figures outline a likely eventuality that is of deep concern to the economy, and the men and women struggling to keep their businesses afloat in such uncertain times. The economic data, combined with challenging trading conditions in the worst affected sectors such as hospitality, means the UK’s business failure rate is likely to rise beyond anything in living memory.’
Only the Vaccine Can Get the Economy Back on Track
Speaking in the House of Commons this week, Chancellor Rishi Sunak pointed out that the government’s emergency support measures were helping protect British business, while adding that the COVID-19 vaccine was the “most important economic lever” to get the economy back on track.
FSB chairman, Mike Cherry, however, suggested the government needed to offer more to stave off the impending deluge.
“The development of business support measures has not kept pace with intensifying restrictions. As a result, we risk losing hundreds of thousands of great, ultimately viable small businesses this year, at huge cost to local communities and individual livelihoods.
The FSB’s press release goes on to outline a 5 point plan by which they’d like to see the government supporting small businesses. These include further small business cash grants, directors income support, as well as a German style scheme with balances reimbursements against revenue loss.
Things Will Get Worse Before they Get Better
In an update to MP’s last Monday, Chancellor Rishi Sunak cautioned that things are likely to worsen before we begin to turn the corner. No more support would be forthcoming before the budget on March 3rd, he added, saying: “The budget is the appropriate place to consider those [measures] given the scale of the response and indeed the fact that all of our major avenues of support have been extended through to the spring.”