Fresh calls for help as small firms' confidence takes a hit
By Rob Freeman | 26th October 2020
Confidence among small firms has continued on a downward trend for a ninth consecutive quarter, according to a new study.
And the Federation of Small Businesses said the results of its quarterly Small Business Index backed its calls for fresh government support.
The FSB welcomed Chancellor Rishi Sunak's updates to coronavirus support packages last week but is calling for more support to help businesses which have received no income support, reduce hiring costs, ease the burden of business rates and provide more recourse for new start-ups.
The quarterly confidence figure fell 28 points to -32.6 with only 34 per cent of those questioned expecting performance to improve over the next three months - 66 per cent predicting a worse performance.
One in four firms said they have reduced headcount in the last quarter - a new high - with 29 per cent expecting to make cuts in the next three months, 12 per cent predicting at least a quarter of staff would go.
And disruption linked to the coronavirus has caused revenue growth to reach a new low, 56 per cent reporting a drop with half expecting a fall in the upcoming quarter.
FSB national chairman Mike Cherry said: "Short memories are common in a crisis but we must not forget that small firms were already under the cosh thanks to political uncertainty, rising costs and creaking infrastructure well before the spring.
"The Chancellor made some very welcome adjustments to support measures last week and it's critical the new Job Support Scheme is straightforward to use, the self-employed can access the help they require and local authority cash grants reach as many of those in need as possible, as swiftly as possible.
"Too many are still without the help they need to weather current disruption - not least company directors, the newly self-employed, those without premises and those further down supply chains in the retail, leisure and hospitality sectors."
He continued: "An ambitious rescue package for these groups is urgently needed.
"With the unemployment rate rising, we'll need to encourage more of those who are out of work to strike out on their own over the months ahead.
"A Kickstart Start-Up programme, inspired by the Kickstart employment initiative and building on the success of the Start-Up Loans and the New Enterprise Allowance programmes, could mark a way forward."
He also called for cuts in employer National Insurance contributions, changes in the "outdated business rates system" and more help for retail, leisure and hospitality."
With the looming deadline for UK-EU trade talks, 53 per cent of exporters reported falls in international sales - up 21 points on a year ago - while 43 per cent expect a drop in exports over the coming three months.
Mr Cherry added: "More than four years on from the EU referendum, small firms need clarity around what the end of the transition period will mean now more than ever.
"Negotiators on both sides must pull out all the stops to secure a deal, one that includes a substantial small business chapter outlining how the new agreement will help the firms that make-up 99 per cent of the UK business community.
"As things stand, small firms are being told to shell out for both safety measures and preparations for our new relationship with the EU. Many would like to do more but have run out of cash after a torrid six months."
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