Fear within UK small businesses peaks as economy shrinks

Fear within UK small businesses has peaked today as the 0.3 per cent fall in October’s GDP reignites a surge in economic concerns.

The drop is nearly three times analysts’ expectations.

“I have felt stress like I’ve never known,” Jenny Blyth, owner of London-based gift company, Storm in a Teacup Gifts, said.

“As 2022 came to an end, I breathed a sigh of relief that such a hard year was over. Little did I know that 2023 was going to be even harder,” she added.

The number of tax-registered businesses fell for the first time since 2011 in 2023, with the drop mainly driven by small businesses, according to data from the Office for National Statistics (ONS).

The number of small businesses in the UK fell to 2.67 million, from 2.72 million in 2022.

“The public is struggling and waiting until the last minute to spend what little they have [so] my cash flow is low right up to the very end of the year,” Blyth said. “This isn’t a way to live… finding a second job seems to be the new norm.”

“Cashflow has been especially tough this year. Everything costs more to buy in, and sales aren’t as strong as they were prior to Covid yet,” Jo Smedley, director at Grimsby-based murder mystery games and events business, Red Herring Games, said.

Research by Simply Asset Finance in November revealed that 74 per cent of small businesses are worried about rising operational costs, while 70 per cent fear supply chain issues.

Furthermore, sales for small businesses fell by 20 per cent in the first half of 2023, according to data from accounting software provider Sage.

“In the closing stages of the year, fortunately, sales have been increasing,” Smedley added.

Charles Breen, director at Wellingborough-based Montgomery Financial, is also optimistic about sales.

“The first half of the year was an absolute car crash… in the second half of the year, activity levels have jumped considerably,” Breen said.

“Business levels have ended up matching last year,” he added. “We are now in a very strong position going into 2024 and beyond.”

Small businesses will now be looking to the Bank of England’s final decision on interest rates for the year, which will be announced on Thursday.