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One in five small businesses forced to cut staff

The latest Federation of Small Businesses (FSB) Small Business Index (SBI) report shows that a “sizable share” of firms have already had to let staff go during the Covid-19 pandemic.

According to the report, the share of small firms that have reduced headcounts over the last three months is at an “all-time high” (23%). The report also shows that a fifth of small firms expect performance to be “much worse” over the next three months and only one in 10 expect the opposite.

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Additionally, small business expectations of future performance are “increasingly polarised”, according to the latest quarterly SBI. Over a fifth (23%) of the 1,400 business owners surveyed for the study expect their performance to be “much worse” over the coming quarter compared to the last three months.

The figure is up 13 percentage points compared with the same period last year but is down considerably on Q1 2020. The proportion who expect their prospects to be “much improved” compared to the last quarter has risen significantly, however, standing at just above one in 10 (13%).

Despite this, those in the accommodation and food service sectors are among the “most confident” about a relative uplift in performance next quarter, with 29% and 26% expecting a significant improvement respectively.

FSB National chairman, Mike Cherry, said: “The majority of small business owners have benefitted from the Government’s emergency support measures but many have not.

“We urgently need to see the Treasury outline how it intends to support those who have been left out, not least company directors and the newly self-employed.”

He added: “Additional help for those who are being forced to stay closed while others re-open is also a must. We have to avoid a scenario where those who’ve received support are able to navigate choppy economic waters over the months ahead while others are left to sink.”

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