17,500 small businesses in East Midlands need additional support to survive

More than 17,000 small businesses in the East Midlands could fold in the next year without Government support, warns the Federation of Small Businesses. Photo by Pixabay.

A record number of owners around the country are planning to close their firms over the coming year, putting the UK on course to lose more than a quarter of a million small businesses, according to the Small Business Index (SBI).

Just under five percent 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 previous financial crash.

The UK SBI confidence measure stands at -49.3, down 27 points year on year. The East Midlands Small Business Index stands at -23.

Nearly a quarter (23%) of small firms have decreased the number of people they employ over the last quarter, up from 13% at the beginning of last year. One in seven say they will be forced to cut numbers over the next three months.

The proportion of small businesses forecasting a reduction in profitability for the coming quarter has spiralled over the past year, rising from 38% to an all-time high of 58%.

Clare Elsby, who chairs East Midlands Policy at the Federation of Small Businesses, said: “We need to adequately support businesses who are feeling the big pinch, particularly those in the East 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 (the three-month lead-up to Christmas and New Year) and those who rely on a thriving night-time economy. The fear of at least 17,500 East Midlands businesses folding, based on this fresh FSB data, is extremely worrying.”

“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.”