The Federation of Small Businesses has sounded the alarm, predicting that a ‘perfect storm’ will hit small businesses in April as a result of rising costs. According to their latest survey, 35% of small firms are at risk of closing down or reducing output as they struggle to cope with increasing wages, energy bills, and tax changes.
This warning comes at a critical time when the economy is slowly recovering from the effects of the ongoing pandemic. Small businesses have been hit hard by the COVID-19 crisis, and now they face another challenge that could potentially push them to the brink.
The cost of doing business is set to rise significantly in April, and small businesses will feel the impact the most. The National Minimum Wage and National Living Wage are both set to increase, putting pressure on businesses with tight profit margins. In addition, energy bills are expected to rise by 9% due to the closure of a major power plant. Furthermore, changes to tax laws will also take effect, adding to the financial burden faced by small businesses.
According to the Federation of Small Businesses (FSB), the combination of these factors will create a “perfect storm” that could prove fatal for many small businesses. Mike Cherry, the national chairman of the FSB, has urged the government to take action and provide support to small businesses to prevent them from closing down.
In an interview with BBC News, Cherry stated, “We need to see an emergency budget in the spring that supports small businesses and the self-employed. We need to see an extension of emergency measures such as business rates relief, the furlough scheme, and the VAT deferral scheme. These measures have been a lifeline for small businesses during the pandemic, and they will be crucial in helping them survive this ‘perfect storm’.”
The FSB has also called for a freeze on all new business-related taxes, including the planned increase in corporation tax. These additional costs will place a heavy burden on small businesses, many of which are still struggling to recover from the pandemic.
The warning from the FSB has been met with concern and sympathy from various organizations. The British Chambers of Commerce (BCC) has expressed their support for the FSB’s call for an emergency budget in the spring. They also emphasize the importance of providing targeted support to the hardest-hit sectors and businesses.
In response to the FSB’s warning, a government spokesperson has stated that they are committed to supporting small businesses during this difficult time. They have already provided an unprecedented package of measures to support businesses through the pandemic, such as loans, grants, and tax deferrals. The government has also extended the furlough scheme until the end of April to help businesses retain their employees.
However, the FSB argues that more needs to be done to prevent small businesses from collapsing. They have urged the government to go beyond the current support measures and provide a comprehensive plan to help small businesses not just survive, but also thrive in the long term.
Despite the challenges ahead, small businesses remain the backbone of the UK economy, accounting for 99.9% of all businesses and providing employment for around 60% of the workforce. It is crucial that the government takes swift action to provide the necessary support and resources to ensure their survival.
In conclusion, the warning from the Federation of Small Businesses serves as a wake-up call for the government to take action and support small businesses during this difficult time. It is imperative that they provide targeted and effective support to help small businesses survive the ‘perfect storm’ of rising costs in April. The future of our economy depends on the survival of these small businesses, and it is our responsibility to ensure that they are given the necessary support to weather this storm.