A REDUCTION in the size of the UK’s economy means growth measures from the Government are more vital than ever, says the Federation of Small Businesses (FSB).
The Federation made the call as trading conditions remain extremely challenging for small businesses.
Reflecting on the threat of recession, Federation of Small Businesses (FSB).
National Chair Martin McTague said: “Confirmation of a shrinking economy is dreadful news for small businesses that have faced increasing recessionary pressures for months.
“Lower reserves and resources mean they are more vulnerable to downturns.
“When confidence in consumers and businesses deteriorates, the UK economy’s outlook is bleak.
“The fall in GDP is one headline figure made up of countless disappointing news for small businesses across the country: a new venue or premises they couldn’t open; a contract which ended unexpectedly; a staff member they had to let go.
“Taken together, the impact on the economy is huge. The Government must demonstrate that it has grasped the scale of the issue.
“Coming out of pandemic-era lockdowns was supposed to be when the economic recovery would start to motor, with the small business community leading the way.
“Following the global financial crisis, nine out of ten people moving back into employment did so through working for a small business or setting themselves up as one by starting their self-employed career.
“A contraction of the small business community of nearly half a million small firms over 2020 and 2021 indicates we are in a recession that could lead to many further losses.
“Established outfits might have to shut up shop, and entrepreneurs’ good ideas could remain on the drawing board.
“Fewer small businesses and start-ups means lower growth, lower employment, and lost tax revenues for the Government. It’s a vicious circle of decline that must be averted rather than managed.”
On November 17, Autumn Statement, Martin McTague continued: “Without growth measures, the Autumn Statement could be about balancing the Government’s books on the backs of small businesses – an approach that will not work, with so many already teetering on the edge.
“The Government must not just balance the books – it has to have a clear set of measures to help boost prosperity, growth and jobs. Without those, we will have an even smaller economy in a year, looking once again for spending cuts and tax rises to balance a spreadsheet total.
“The FSB Small Business Index confidence reading for the third quarter was at its lowest-ever level outside lockdowns.
“Over two-thirds of small firms told us their revenues stagnated or fell over the quarter, while nine in ten say their costs are higher than a year ago – with two in five saying they’ve seen a significant increase.
“One in five microbusinesses with under 10 employees has less than a month’s worth of cash reserves. And the same is true for one in nine businesses employing between 10 and 49 employees.
“That shows how “thin” the cash cushion is for thousands of small firms, and how perilous the situation is for them.
“The Chancellor and Prime Minister must include measures to kickstart the economy, and get it growing again, to stem the loss of small businesses, and give them an operating environment that will allow them to get through a tough winter, and then flourish in the spring.”