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Gloucestershire Business News

Half a million jobs at risk as small businesses face "double whammy" of costs

Half a million employees are at risk of losing their jobs as small businesses face rising costs.

According to research by Quantuma, 6,500 small and medium-sized businesses are at a higher-than-average risk of insolvency. It predicts 19,000 businesses are likely to fail by 2024 - the highest number of corporate insolvencies in a decade.

Start-ups that are less than three years old are at particular risk, it said.

And more than 500,000 UK employees face a risk of job loss that is between 4-25 times greater than the UK average.

The worrying figures are a result of rising costs, higher taxes, fallout from Brexit and staff shortages due to the pandemic taking their toll.

Sam Holliday, development director at Federation of Small Business for Gloucestershire, said small businesses owners are facing a "double whammy" of extra costs

He was speaking on Friday  when a raft of price hikes were introduced including an increase in the energy bill cap, National Insurance, council tax and the living wage. Costs for water, broadband and stamps, are also going up.

"It really is April Cruel Day," he said.

"For small businesses, with the costs they incur they will have get a very small profit margin but they also have personal lives.

"If you run a small factory or office you will be facing all these costs on your ever shrinking profit levels and then go home and have to face them all as well. It's almost a double whammy.

"It's fantastic national minimum wage has gone up but that's another cost for small business owners.

"A lot of things brought in during Covid to support them end today (April 1) and I think it's going to be the start of a very painful Spring and Summer for a lot of businesses."

Quantum's research shows staff levels remain low. Small businesses employed 8.4 per cent fewer people than in February 2020, with the hospitality industry having 22.7 per cent fewer jobs than two years ago following the pandemic, while small manufacturing firms have 15.1 per cent fewer jobs available.

Wage bills are also increasing. Salaries increased by 4.3 per cent in February - the highest since the research had begun in 2017 - with hospitality again taking the biggest hit with a 7.7 per cent wage hike.

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