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Monday 10 January 2022 8:29 am  |  Updated:  Monday 10 January 2022 8:30 am

Three in four small business owners worried about rising inflation this year

By: Nicholas Earl

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"The skills gap remains stubbornly high," Martha Lane Fox, Chancellor at The Open University and President of the BCC said.
"The skills gap remains stubbornly high," Martha Lane Fox, Chancellor at The Open University and President of the BCC said.

Nearly three-quarters of small business owners are concerned about rising inflation, amid increasing pessimism about market conditions going into 2022, according to analysis published by fintech group Iwoca.

In a survey of 500 UK small businesses conducted by Panelbase, 71 per cent of respondents cited inflation as the biggest concern, which is on course to hit six per cent over the coming months.

Interest rates have already risen to 0.25 per cent and the Bank of England is not ruling out further hikes in future monetary policy meetings.

The threat of further restrictions also remains a worry for small businesses given the tough trading conditions, with 66 per cent of small business owners citing additional Covid-19 measures as a key issue going into the new year. 

Meanwhile, as energy costs soar and put further pressure on small businesses – which are not protected by Ofgem’s domestic consumer price cap – almost half of small business owners (46 per cent) surveyed named increased running costs as a main concern for their business this year.

The dual impact of Brexit and the pandemic disrupting global trade routes in the past year is also darkening the mood of the UK’s business sectors.

Almost a quarter of small business owners were worried about how supply chain issues might affect their business.

Seema Desai, iwoca’s chief operating officer, said: “These results show that small business owners are concerned about rising inflation and the subsequent knock-on effect this will bring.”

This pessimistic outlook, with multiple UK small businesses facing multiple difficult headwinds in 2022, was also influencing business owners’ attitudes to hiring.

Four in five small business owners say that they do not expect to hire new employees this year, with only one in ten (nine per cent) predicting they will hire over the next 12 months, despite record vacancies across the economy. 

Optimism among small business owners is in short supply, with almost a third (30 per cent) predicting that they will be worse off by the end of 2022.

Alongside low optimism, only 28 per cent of small businesses expect 2022 turnover to grow this year, and one in five (19 per cent) expect turnover to shrink.

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We’re being taxed out of existence, companies warn

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