THE NATIONAL Chair for the Federation of Small Businesses Martin McTague has issued a stark prognosis for small businesses in the months ahead.
He warned that rising energy prices and current business rates and tax will see many businesses go under; which could have a major impact on the UK economy as 60% of the private sector workforce work for small businesses.
Speaking to GB News, Mr McTague said: “There’s a completely toxic mix, and that mix is very low cash reserves; I think the ONS figures said that that 40% of businesses are operating on less than three months worth of cash.
“You’ve got very high taxation levels, the highest for 50 years. A massive slump in demand, and then if you build into that mix the fact that energy prices for some businesses are four or five times what they were previously.
“Most businesses renew their contracts in October, and the quotes that I’ve seen from a lot of our members were alarming. In some cases their prices had gone from £23,000 a year up to £112,000 per year. One farmer I spoke to was seriously considering putting a generator on to power his operation because he couldn’t see how he could operate any other way.
“Now what we need, starting Monday I think, is a government that recognises that this is an urgent problem. And that a lot of good businesses will fail, unless they act. I think sometimes people treat it as if it’s something that you can separate out from consumer issues, whereas 60% of the private sector workforce work for SMEs. So that will be a major problem for lots of people.”
“There are three key things I think we need to do starting Monday. The first will be to reverse the National Insurance increase, that was something that almost universally all small businesses disliked.
“Then there is a serious problem with business rates, I think it’s time that the government doubled the small business rates relief, currently standing at less than £12,500 and could go up to £25,000. I think that would encourage a lot of small businesses, particularly in the North of England.
“Then cut VAT to try and encourage demand. At a time when a lot of consumers are lacking confidence, you need to give them that bit of a push to get back in the shops.”
