A survey from the Federation of Small Business has warned 250,000 small businesses are on the brink of closure, under combined pressure from the Coronavirus pandemic and Brexit.
One in five businesses told the survey they had cut jobs in the final quarter of 2020 and one in seven expects to make further employment cuts in Q1 of 2021.
The warning follows the release of the latest Small Business Index (SBI), which showed that confidence among small business owners was at its second lowest point in the report’s 10-year history, second only to that recorded at the beginning of the pandemic in March 2020.
The UK SBI confidence measure stands at -49.3, down 27 points year-on-year. Meanwhile, the London Small Business Index stands at -61.
80% of the business owners surveyed said that they do not expect their performance to improve until at least March 2021, with 58% expecting weaker profitability during the entirety of 2021.
FSB Chairman Mike Cherry commented: “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.
“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.
“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 because of a failure to extend grace periods today.”
FSB London Policy Chairwoman, Rowena Howie, added: “We need to adequately support businesses who are feeling the big pinch, particularly those in Central London boroughs who missed out on a fair proportion of local discretionary grants and who have seen a massive footfall reduction, and those who rely on a thriving London night-time economy.
“The fear of at least 50,000 London businesses folding in the capital, based on this fresh FSB data, is extremely worrying.”