Record number of small firms could close, warns FSB

At least 250,000 small businesses in the UK are set to close without further help, the Federation of Small Businesses (FSB) has warned.

Its latest quarterly survey showed that confidence among small business owners is at the second-lowest level in the report’s ten-year history, second only to that recorded in March 2020. The majority of those surveyed (80%) do not expect their performance to improve over the next three months.

Worryingly, a record number of small business owners surveyed at the end of December 2020 said that they were planning to close their firms over the coming 12 months, putting the UK on course to lose more than a quarter of a million businesses.

Just under 5% of the 1,400 firms surveyed for the study said they expect to close this year. This figure does not include those hoping to survive despite having frozen their operations, reduced headcounts or taken on significant debt.

“The development of business support measures has not kept pace with intensifying restrictions,” said FSB national chairman Mike Cherry. “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. A record number say they plan to close over the next 12 months, and they were saying that even before news of the latest lockdown came through.

“At the outset of the first national lockdown, the UK Government was bold. The support mechanisms put in place weren’t perfect, but they were an exceptionally good starting point. That’s why it’s so disappointing that it’s met this second lockdown with a whimper.

“There are meaningful lifelines for retail, leisure and hospitality businesses, which are very welcome as far as they go. But this Government needs to realise that the small business community is much bigger than these three sectors.”

Firms in supply chains and those without commercial premises are among those still “left out in the cold”, Cherry added.

The FSB has presented the Treasury with proposals on how to address the current gaps in support.

In a statement quoted by BBC News, the Treasury said that no changes were planned at present, but added: “Our support schemes are designed to get help to those who need it most whilst protecting the taxpayer from fraud, but of course we keep everything under review and are always open to further ideas.”