Fears for economy increase as triple challenge hits UK's small businesses

  • 21 Sep 2021

Small businesses are facing an unprecedented triple challenge in the vital run-up to Christmas, experts have warned.

FSB has made a stark warning about three issues which could cripple the UK economy and small businesses; supply chain hold-ups, staffing shortages and tax rises.

The business lobbying group is urging ministers to ease the pressures faced by the thousands of firms making up the backbone of the UK's economy.

They are battling through a litany of problems caused by the pandemic, FSB said, and companies which have struggled through Covid could now be forced into insolvency if the Government pushes ahead with tax hikes.

 

Chaos caused by the pandemic in global trade means shipping costs are soaring, while some goods are stuck in ports because there are too few lorry drivers to move them to warehouses.

Retailers to restaurants are struggling to hire staff, as university students are less likely to take on part-time work and many overseas workers have left the UK.

And now businesses have another hurdle approaching, as the Government plans to increase the rate of National Insurance which they must pay from next year as well as slapping a new levy on dividends.

Federation of Small Businesses (FSB) National Chair Mike Cherry said: “Small firms trying to recover from the pandemic are facing a barrage of hits to this which is now very visible as these latest retail figures show.

“Supply chain problems are hitting hard alongside spiralling employment costs and staff shortages, while the consumer-led recovery could be losing steam.

“News that the government’s regressive jobs tax will place 50,000 people out of work could not come at a worse time.  Retail businesses are nervous about their peak Christmas season, with an opaque winter covid plan likely to see trade restrictions installed at just a week’s notice. It feels to many like a sword of Damocles with a difficult winter ahead.

“Exporters, who are among some of the most innovative small firms, need more support, with delays at the border and soaring costs, or risk hampering their efforts to recover.

 

“Measures such as uprating the Employment allowance to support firms struggling with recruitment costs would help to free up cashflow to spur recovery of local communities, and promote hiring as furlough ends.

“Small firms are the backbone of our economy, if they continue to suffer, then the rest of the country suffers.”

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