The next prime minister has been urged to prioritise small businesses after it was revealed that one in seven small- and medium-sized enterprises (SMEs) plan to shrink, sell or shut down.
According to the latest quarterly Federation of Small Business (FSB) Small Business Index, SMEs are struggling with rising costs, a high tax burden and competition for talent.
As a result, business confidence has dropped to -24.7, down more than 40 points on the same quarter last year. This is the lowest figure on record outside of periods of Covid restrictions.
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The FSB has called for the next prime minister to tackle the challenges facing SMEs in order to avoid further business closures.
“The cost of doing business crisis has worsened to the point where confidence is now lower than during last year’s massively disrupted festive trading season,” said the FSB’s national chair Martin McTague.
“Firms are trying to absorb additional cost pressures but can only do so much before they’re forced to raise prices.
“The small business community reduced in size to the tune of hundreds of thousands over lockdowns. Unless policymakers act fast, history is set to repeat itself.
“Firms desperately need help with the charges that hit them regardless of profitability: business rates, national insurance, utilities, fuel and those linked to supply chain disruption.
“We’re looking to prime ministerial candidates for unequivocally pro-business, pro-growth commitments. There is still time to act, but time is of the essence.”
A survey by the FSB found that 77 per cent of SMEs do not expect their performance to improve over the coming quarter, while more than a third (38 per cent) expect it to worsen.
89 per cent of small firms said that operating costs are up this year, with fuel and utilities representing the highest price rises.
Less than a quarter (23 per cent) of businesses said they plan to increase capital investment over the next quarter compared to last, and one in seven (15 per cent) said they plan to consolidate, close or sell their firms over the coming year.