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A fifth (20%) of small businesses in the UK are in serious risk of closure due to the rising cost of living. The biggest areas of concern are the West Midlands and the North East, according research from Tide .Which found that companies are increasingly struggling to handle the ever-rising costs of operation.
Tide study found around 70% of businesses had to increase hours. Also a third relied on support from friends and family to stay afloat. The study also found that 10% of small businesses were forced to make staff cuts.
Reasons for expected closure of small businesses
The largest expense concerns for the businesses surveyed was fuel and energy, followed by inflation and supply chain issues.
Fuel prices and energy costs hit record heights this year. With the conflict in Ukraine and Russia worsening this issue.
Inflation is also at an alarming level, currently at 9.1%, however, the Bank of England has warned it could climb as high as 11% later in the year.
The data highlighted the West Midlands as the most at-risk area for businesses facing closure. Followed by the North East, the South West, Scotland, and the East Midlands.
Tide CEO statements:
Oliver Prill tide CEO said the following
“Small businesses are a pillar of the UK economy and clearly, they are finding it extremely tough in the current macroeconomic climate … Tide’s research shows that the UK could face a mass closure of small businesses, as the cost-of-living crisis turns into a cost-of-doing-business crisis.”
Prill called on the government to extend its support of small businesses as the cost of living crisis continues.
“We urge the UK government to help small businesses through the crisis e.g., by introducing VAT relief for all small businesses until 31 March 2023, the end of the full tax year… Small business owners are doing their best to keep their companies running, including getting help from their family and friends, but they need more support.”
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