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The outlook for the UK’s small businesses

The outlook for the UK’s small businesses

The new Prime Minister’s in-tray is overflowing. Inflation, the cost of living crisis, war in Ukraine, US/China tensions but buried under all that paperwork is, hopefully, another sheet of A4. One that’s absolutely vital to the country’s economic health, that will play a crucial part in our eventual economic recovery; the UK’s small businesses.

Of late, the small business glass,  at least as far as the headline writers have been concerned, has been resolutely half-empty.

At the beginning of last month, City AM announced that the UK’s small businesses were ‘scrapping hiring plans’ in the face of the current economic uncertainty. Small businesses were facing a ‘£50bn time bomb’ due to rising energy prices: up to a third of them could ‘go bust’ without access to finance and, of course, the Bank of England would inevitably raise interest rates again.

How important are small businesses to the UK economy? According to the Federation of Small Businesses website, there were 5.5m small businesses in the UK at the start of 2021, accounting for 60% of the employment and 50% of the turnover in the UK’s private sector. Employment in business with up to 49 staff was 12.9m, almost half of the total employment.

So the importance of small businesses to the UK economy cannot be overstated. That’s why their future is just as important as energy bills, inflation and foreign affairs. Germany has just introduced a €65bn (£56bn) package to ease the threat of soaring energy costs, including tax breaks for energy intensive businesses.

We can probably expect to see the same from the UK’s new Chancellor but he needs to remember that ‘energy intensive’ means the local pub and the B&B as much as it means heavy manufacturing.

We are privileged to number some outstanding small businesses among our clients. The owners and directors of those businesses are enterprising, hard-working and determined. They are also, despite the best efforts of the headline writers, cautiously optimistic. They can rest assured that we will do whatever we can to support them with good, consistent long-term financial planning.

Let us hope that the new Government plays its part as well, recognising the importance of small businesses to the UK economy and doing everything it can to help them lead the UK’s eventual recovery.

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