January 25, 2021
Main Street Monday — Over 250,000 UK Small Businesses Set to Close
Despite the UK’s best efforts to support SMBs with their Bounce Back loan program, a recent study conducted by the Federation of Small Businesses (FSB), found a record number of UK small business owners are planning to close their firms over the coming twelve months, putting the country on course to lose more than a quarter of a million businesses, in 2021.
“The development of business support measures has not kept pace with intensifying restrictions,” says 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.”
Here are the findings from FSB’s quarterly report on UK small business health and optimism:
- Already, one in five (23%) UK small businesses have been forced to reduced employee headcounts in the last three months due to having government-mandated frozen operations or significant debt. An additional one in seven (14%) small businesses expect to reduce employees in the first quarter of the 2021 calendar year.
- The proportion of small businesses forecasting a reduction in profitability for the coming quarter has spiraled over the past year, rising from 38% to 58%, an all-time high.
- Almost half (49%) of small business exporters expect international sales to drop this quarter, up from 33% at this time last year.
- The FSB’s small business confidence index measure stands at -49.3, down 27 points year-over-year. The reading is the second-lowest in FSB history, second only to that recorded in March 2020.
- 80% of small business owners in the UK do not expect performance to improve over the next three months.
“We also have to look again at how we treat emergency debt facilities over the coming months. Many of those who have borrowed significantly have done so in order to innovate. It would be a shame to lose the top businesses of tomorrow,” Mike Cherry adds. “This Government can stem losses and protect the businesses of the future, but only if it acts now.”