Small businesses and manufacturers in Britain are preparing themselves for a fight this year as they stand to fight the double threat of Covid-19 and weaker post-Brexit trade with the European Union. A quarterly poll by the Federation of Small Businesses (FSB) revealed over 250,000 small firms expect to fold without further government financial support. Manufacturers' trade body Make UK said its members expected lower investment in the UK and to have a harder time recruiting talent.
The FSB said just under five per cent of the 1,400 companies they surveyed were expecting to close down this year. If the trend continues, 295,000 small businesses across the UK fear they will go under in a total of 5.9 million. Eighty per cent of the vast majority of firms surveyed did not expect their prospects to improve over the next three months.
FSB's national chair, Mike Cherry, said the amount of government support available had dwindled as the pandemic continued to lash on. He said, “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 lockdown with a whimper.”
He welcomed support for retail, leisure and hospitality businesses but said that many were “still being left out in the cold”, including company directors, the newly self-employed, supply chains, and firms without commercial premises.
The group published a five-point plan to assist small businesses, including grants, income support and extended debt relief. However, it warned that firms already lacked the cash to cope with the tough trading environment, especially considering the costs associated with adjusting to the UK's new trading relationship with the EU. Meanwhile, survey data from Make UK, in partnership with accounting firm PwC, indicates that its members feel the same way about the post-Brexit challenge.
Make UK's chief executive Stephen Phipson said, “The transition to new trading arrangements with the EU was always going to be the biggest challenge facing manufacturers this year and the fact we have an agreement in place doesn't alter that.” He called for a bold industrial strategy that goes beyond “short-term tinkering”, instead laying out a plan for the next decade.
The BDO Output Index, which measures economic data from the UK's main business surveys, averaged 73.62 in 2020, well below the previous low of 83,28, recorded in 2009. BDO partner Kaley Crossthwaite said, “These figures reinforce just how stark the economic impact of the pandemic has been. As we enter a third national lockdown, crippling challenges will continue to plague businesses in the weeks and months ahead. Successful and rapid rollout of Covid-19 vaccines will be the single biggest driver of business recovery.”
