Record Numbers of Small Firms Could Fold, Says FSB
A record number of small companies could fold over the course of 2021 unless swift action is taken to help them in the coming weeks.
That’s according to the Federation of Small Businesses (FSB), which is warning that hundreds of thousands of small firms across the UK are at real risk of being forced out of business by the latest lockdown and the ongoing Covid crisis.
Around one in five small companies reduced their headcounts in December 2020 and 5 per cent say they now expect to close at some point this year.
If that 5 per cent figure is representative and a comparable proportion of small firms do indeed close then the UK would be faced with losing around a quarter of a million businesses within 12 months.
Already many thousands and even millions of small companies have needed to close temporarily, reduce their wage bills and take on significant amounts of debt just to survive during what has been an exceptionally difficult period.
The pandemic and the resulting lockdowns have been the main cause of problems being faced by small firms but exporters are also now having to reorganise their operations in line with the UK’s newly aligned post-Brexit relationship with the EU.
More businesses than ever before now expect to see their profits reduced during the first three months of this year, according to the FSB, which is calling for government to provide urgent and comprehensive support to struggling firms.
“The development of business support measures has not kept pace with intensifying restrictions,” said the FSB’s 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.”
Mr Cherry said he hoped to see the government’s latest financial support packages go beyond the retail, leisure and hospitality sectors, where most recently announced help has so far been targeted.
“Government needs to realise that the small business community is much bigger than these three sectors,” he said. “This government can stem losses and protect the businesses of the future, but only if it acts now.”