20,000 small businesses could fold in West Midlands
A record number of small business owners are planning to close their firms over the coming 12 months, putting the UK on course to lose more than 250,000, according to the Federation of Small Businesses
At least 20,000 West Midlands small businesses are set to fold without further help, the FSB's latest Small Business Index (SBI) report warns
Just under five per cent of the 1,400 firms surveyed for the study say they expect to close this year. The figure does not reflect the threat of closure faced by those hoping to survive despite having frozen their operations, reduced headcounts or taken on significant debt.
The proportion is at an all-time high for the SBI, which launched in the wake of the financial crash, and is more than double that recorded at the same point 12 months ago.
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The UK SBI confidence measure stands at minus 49.3, down 27 points year-on-year. The West Midlands Small Business Index stands at minus 36.
The reading is the second-lowest in SBI history, second only to that recorded in March 2020.
Close to a quarter (23 per cent) of small firms have decreased the number of people they employ over the last quarter, up from 13 per cent at the beginning of last year. One in seven say they’ll be forced to cut numbers over the next three months.
FSB West Midlands policy chairman Nishi Mehta said: “We need to adequately support businesses who are feeling the big pinch, particularly those in the West Midlands who missed out on a fair proportion of local discretionary Grants and who have seen a massive footfall reduction in the run up to the Golden Quarter and those who rely on a thriving night time economy. The fear of at least 20,000 West Midlands businesses folding, based on this fresh FSB data, is extremely worrying.
Intensifying restrictions
“Company directors, the newly self-employed, those in supply chains, and those without commercial premises are still being left out in the cold. We’ve published a five-point plan to address gaps in the support landscape, and we look forward to the Treasury embracing it. Action in March will be too late to stem closures.”
FSB regional chairman Rich Bishop added: “The development of business support measures has not kept pace with intensifying restrictions. As a result, we risk losing tens of thousands of great, ultimately viable small businesses this year, at huge cost to local communities and individual livelihoods. A record number say they plan to close over the next 12 months, and they were saying that even before news of the latest lockdown came through.
“At the outset of the first national lockdown, the UK Government was bold. The support mechanisms put in place weren’t perfect, but they were an exceptionally good starting point. That’s why it’s so disappointing that it’s met this second lockdown with a whimper.
“There are meaningful lifelines for retail, leisure and hospitality businesses, which are very welcome as far as they go. But this Government needs to realise that the small business community is much bigger than these three sectors.
“We also have to look again at how we treat emergency debt facilities over the coming months. Many of those who have borrowed significantly have done so in order to innovate. It would be a shame to lose the top businesses of tomorrow because of a failure to extend grace periods today.
“All the while our exporters are trying to get across what a new EU-UK trade agreement means for them without the cash they need to make adjustments. Direct funding to help them manage new obligations in the form of transition vouchers is urgently needed.
“This Government can stem losses and protect the businesses of the future, but only if it acts now.”
