COVID-19: A record 250,000 small firms on the brink of closure – industry body

A record 250,000 small firms are set to close this year under combined pressure from the coronavirus pandemic and Brexit, according to an industry body.

The Federation of Small Businesses (FSB) said its survey revealed a “huge cost” ahead for employment without additional support from the Treasury to help mitigate the challenges faced by its members.

Its quarterly Small Business Index, which took in responses from 1,400 companies, found confidence at its second-lowest level since the financial crisis at a time when firms are grappling renewed COVID-19 lockdowns.

It said exporters were also “feeling the strain” from new EU trade rules, with just under half expecting international sales to fall.

One in five firms cut jobs in the final quarter of 2020, the survey found, while one in seven expect to slash employment in the current quarter to March.

Expectations for weaker profitability during 2021 reached an all-time high of 58%, it said.

FSB chairman Mike Cherry warned that the time of the March budget would be too late for chancellor Rishi Sunak to expand his crucial financial support, arguing too many firms were already falling through gaps.

“The development of business support measures has not kept pace with intensifying restrictions.

“As a result, we risk losing hundreds of thousands of great, ultimately viable small businesses this year, at huge cost to local communities and individual livelihoods.”

He added: “Company directors, the newly self-employed, those in supply chains and those without commercial premises are still being left out in the cold.”

A Department for Business spokesperson responded: “We understand these are extremely challenging circumstances for businesses, which is why we have put in place one of the most comprehensive and generous packages of business support in the world worth £280bn.

“This includes a new one-off grant worth up to £9,000, VAT relief, various loan schemes, a business rates holiday as well as the extended furlough scheme.”

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