At least 250,000 of the UK’s small businesses set to fold

The Federation of Small Businesses has published the findings from its latest Small Business Index study which surveyed 1,401 small firms.  Conclusions include:

  • Confidence is at the second lowest ebb in the report’s 10 year history
  • One in five firms reduced headcount in three months to December 2020
  • An all-time high number of respondence expect profits to fall over the next 3 months

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 more than 250,000 (a quarter of a million) businesses.  The figure does not reflect the threat of closure faced by those hoping to survive despite having frozen their operations, reduced headcounts or taken on significant debt.

The vast majority of those surveyed (80%) do not expect their performance to improve 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.

Close to a quarter (23%) of small firms 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.

FSB National Chairman Mike Cherry said: “Company directors, the newly self-employed, those in supply chains, and those without commercial premises are still being left out in the cold. Action in March will be too late to stem closures.  This Government can stem losses and protect the businesses of the future, but only if it acts now.”

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