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FSB Small Business Index: 250,000 Businesses at Risk

13th January 2021

The Federation of Small Businesses has published the results of its quarterly Small Business Index (SBI), which captured the responses of 1,401 small companies from around the UK.

The results, which concern the three months up to December 2020, highlight a number of areas where small businesses have had to make concessions in order to stay afloat and detail the optimism, or lack of it, that they have for the coming year. Importantly, these sentiments were provided before the implementation of a third lockdown.

It reported that the confidence of respondents was at its second lowest since the SBI first began around 10 years ago (it reached its lowest in March 2020). Of those surveyed by the membership organisation, 80% do not expect business performance to improve over the next three months and an all-time high figure of respondents forecasted a reduction in profitability (58%).

The SBI also indicated that: “one in five firms reduced headcounts in [the] three months to December; one in seven expect to do so this quarter”.

Moreover, around 5% of the small businesses surveyed indicated that they would not be able to survive through 2021. If this figure truly represents the sediment held by the c. 5.9 million small businesses, then there can be an expected loss of around 250,000 companies across the UK in 2021.

FSB Chairman Mike Cherry commented:

“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. 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.”

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