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\t\tSmall firms are bracing for mass closures and contraction, a survey has shown.\t<\/p>\nA record number of small businesses are expecting to shrink or close down in the next year, a leading industry group has warned, amid a \u201cvicious\u201d cycle of low growth and fears that next month\u2019s Budget could cause more pain for businesses.<\/p>\n
Nearly one in three of the UK\u2019s small businesses (30 per cent) expect to cut operations, sell up or collapse in the next 12 months, according to the Federation of Small Business (FSB).<\/a><\/p>\n
Owners said the November Budget<\/a> came at a \u201cmake-or-break\u201d moment for small firms as net confidence dropped to -58 in the third quarter of the year, lower than the previous -44 figure and the second lowest reading since the start of the pandemic.\u00a0<\/p>\n
Industry officials also said the portion of firms expecting to shrink was \u201cunprecedented\u201d as they urged Chancellor Rachel Reeves to lower business rates <\/a>and reduce taxes on entrepreneurship<\/a>. <\/p>\n
The survey showed only 18 per cent are forecasting growth in the next year while 6 per cent expected to close in that time, suggesting some 300,000 firms could go insolvent over 12 months.\u00a0<\/p>\n
The FSB\u2019s policy chair Tina McKenzie warned the small businesses, often referred to as \u201cthe backbone of the UK economy\u201d, faced bigger threats than at other times and required a \u201cpositive backing\u201d from the government.\u00a0<\/p>\n
\u201cMillions of small businesses shrinking, closing, or selling up instead of growing means a vicious cycle of a lower tax take, higher unemployment, and greater demands on the state all exacerbating each other in a downward spiral,\u201d McKenzie said.\u00a0<\/p>\n
\u201cThe Chancellor\u2019s Budget speech will be a make-or-break moment for small businesses.\u00a0<\/p>\n
\u201cThe stakes couldn\u2019t be higher. Without small businesses economic growth is a lost cause. Small firms will be looking for positive backing.\u201d<\/p>\n
\t\t\t\t\tRead more<\/p>\n
\t\t\tCo-op warns 150,000 jobs at risk ahead of Autumn Budget<\/a><\/p>\n
For the final three months of the year \u2013 dubbed the \u201cgolden quarter\u201d as it often brings a rush of income for retailers and hospitality sectors\u2013\u00a0 nearly half (49 per cent) expected their revenue to fall.\u00a0<\/p>\n
Only 21 per cent say their revenue will grow as the end of the year comes.\u00a0<\/p>\n
Budget a \u2018make-or-break moment\u2019 <\/p>\n
The survey is likely to pile pressure on Reeves to support smaller businesses at the Budget, with most owners putting their pessimism down to low growth hopes and rising taxes.\u00a0<\/p>\n
The state of the domestic economy \u2013 which grew<\/a> by just 0.1 per cent in August \u2013 was the driving force behind low confidence for 68 per cent of small firms while the tax burden, which is around a 15-year high for businesses, was a factor for 45 per cent of companies.\u00a0<\/p>\n
Over a third of respondents (34 per cent) said labour costs were contributing to lower growth hopes.\u00a0<\/p>\n
Businesses are also sounding the alarm over the government\u2019s Employment Rights Bill<\/a>, which would hand workers new protections on sick pay and a right to sue bosses for unfair dismissal from their first day on the job.<\/p>\n