Small businesses at ‘breaking point’ ahead of Spring Statement
Small businesses are at “breaking point” just days ahead of Rachel Reeves‘ Spring Statement, an insurance boss has warned.
Almost one in five small business owners have said they will be forced out of business within a year due to bleak economic conditions, according to data from Simply Business.
As many fear the increasing costs will push them out of business, Simply Business’ chief executive Julie Fisher warned the impact on the economy would be “catastrophic”.
Fisher told City PM: “The noise surrounding the Spring Statement has offered little expectation of significant relief.
“Yet small business owners across the UK will be watching closely, hoping for any measures that provide support and signal that the Chancellor remains committed to putting their needs at the heart of the country’s economic recovery.”
Small and medium-sized businesses (SMEs) were dealt a blow during the Autumn Budget after the Chancellor hiked employers national insurance contributions 1.2 per cent.
A quarter of the 957 firms surveyed by Simply Business called for the Chancellor to reverse her NIC hike, with the additional costs stinting their growth.
The impact has extended across the workplace, with 24 per cent of small businesses cancelling hiring plans, and 16 per cent forced to reduce employee’s hours.
Labour’s Employment Rights bill, which included the axing of ‘fire and rehire’ practices and ‘exploitative zero hour contracts,’ posed another headache for businesses who fear the legislation will make them an easy target for lawsuits.
Fisher said: “If the Chancellor is to fulfil her promise of kickstarting our economic growth, small businesses must be placed at the heart of our recovery plan.”
To battle rising costs, 43 per cent of SMEs said they planned to raise prices.
However, only 17 per cent expected profits to improve in the upcoming year.
Fisher urged the government to consider small businesses’ integral role in the UK economy, with firms accounting for 60 per cent of private sector employment and their collective turnover topping £2.8tn.
She said: “They are the lifeblood of our communities, and the UK’s prosperity is directly dependent on their success.”
“What’s best for small businesses, is best for our economy.
“SMEs have consistently demonstrated growth when they are empowered to do so – tackling financial barriers and simplifying regulation encourages creativity and productivity, allowing independent businesses to focus on what they do best,” Fisher urged.