250,000 small businesses could go to the wall this year, warns FSB


A record number of small business owners are planning to close their firms over the coming 12 months, putting the UK on course to lose more than 250,000 companies, it has been claimed.

Just under 5% of the 1,400 firms surveyed for the Federation of Small Businesses’ Small Business Index (SBI) said they expect to close this year.

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.    

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The proportion is at an all-time high for the SBI, which launched in the wake of the financial crash, and is more than double that recorded at the same point 12 months ago.

There are 5.9 million small firms across the UK, according to the Department for Business, Energy and Industrial Strategy.

The UK SBI confidence measure stands at -49.3, down 27 points year-on-year. The reading is the second-lowest in SBI history, second only to that recorded in March 2020.

The vast majority of those surveyed (80%) do not expect their performance to improve over the next three months.  

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. BEIS estimates that 16.8 million people work in smaller firms across the UK.

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.     

FSB National chairman, Mike Cherry, said: “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. 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.  

Mr Cherry said that meaningful lifelines offered to retail, leisure and hospitality businesses were “very welcome” but said other industries were struggling to access support.

“Company directors, the newly self-employed, those in supply chains, and those without commercial premises are still being left out in the cold,” he said.

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Lee Peart

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