Many Small Businesses at Risk
FSB issues warning as small businesses struggle
Increasing running costs are continuing to place a heavy burden on small businesses according to the Federation of Small Businesses (FSB). They have issued a warning that around 500,000 small businesses are at serious risk of going bust within the next few weeks without new government support.
FSB Chairman Martin McTague said on BBC Radio 4’s Today programme. “…there is still a massive problem with small businesses. They are facing something like twice the rate of inflation for their production prices, and it’s a ticking time bomb. They have got literally weeks left before they run out of cash and that will mean hundreds of thousands of businesses, and lots of people losing their jobs.”
McTague referenced figures from the Office for National Statistics, which showed that 40%, of the UK’s small businesses had less than three months’ worth of cash left to support their operations. Of those 2m, the FSB chairman said about 10% – or 200,000 – were in “serious trouble”, and that another 300,000 “have only got weeks left”.
He said: “It is a very real possibility because … they don’t have the cash reserves. They don’t have any way they can tackle this problem.”
Consumer price inflation hit 9% in April, the highest level since 1982. Costs have been driven higher by a jump in energy bills, record petrol prices and the rising cost of a weekly shop. The Bank of England has estimated inflation will peak at about 10% later this year.
Businesses have also faced continually rising costs, with factory input prices increasing by 18.6% over the past year, a record high. Many firms are raising their prices in response, feeding into inflationary pressures across the country.
