The Quarterly Small Business Index (SBI), compiled by the Federation of Small Businesses (FSB) revealed that the number of SMEs predicting a drop in profitability for the coming quarter has risen significantly from 38% to 58% – a record figure.

Twenty-three per cent of small firms have reduced their staff numbers over the last quarter (up from 13% at the beginning of last year) and 14% believe they’ll be forced to cut their numbers over the next three months.

FSB National Chairman Mike Cherry, said, “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.  

“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.

“Company directors, the newly self-employed, those in supply chains, and those without commercial premises are still being left out in the cold.”

The Chartered Institute of Personnel and Development (CIPD) has also commented on the current situation for SMES, stating that businesses cannot wait for the March Budget to get certainty on job protection measures beyond Spring.

Ben Willmott, head of policy for the CIPD, said, “Given the new restrictions, the government must commit to extending the furlough scheme to at least the end of June and it must make this decision now. Employers simply cannot wait for the Chancellor’s Budget in March to get this assurance: they need certainty and a long-term view now.  

“Announcing a longer-term extension to the furlough scheme would give employers in all sectors the confidence and support they need to continue to protect jobs until the vaccination programme starts to take effect and we hopefully start to see the economy recover. 

“While it’s right that the most vulnerable groups are being prioritised, vaccinations for most working people stand to be many weeks and even months away. The Coronavirus Job Retention Scheme must be in place for longer to ensure that jobs are protected during this time.”

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