If a fresh wave of government assistance is not released immediately, some 500,000 small businesses in the UK will go bankrupt within weeks, the chairman of the Federation of Small Businesses (FSB) Martin McTague has warned.
“We don’t have any problem with the way the chancellor dealt with consumer needs,” McTague told BBC Radio 4’s Today program earlier this week, commenting on the latest £15 billion ($19 billion) cost of living package released by the UK government.
“But there is still a massive problem with small businesses,” he said.
“They are facing something like twice the rate of inflation for their production prices, and it’s a ticking timebomb. They have got literally weeks left before they run out of cash and that will mean hundreds of thousands of businesses, and lots of people losing their jobs.”
McTague also cited the latest figures revealed by the Office for National Statistics, which showed that 40%, or two million, UK small businesses had less than three months’ worth of cash left to run operations.
According to the FSB chairman, some 10%, or 200,000, of those two million were in “serious trouble,” while another 300,000 “have only got weeks left.”
In April, UK consumer price inflation hit 9%, the highest level since 1982, inevitably driving up costs by a jump in energy bills, record petrol prices and the rising cost of a weekly shop. The Bank of England expects inflation to peak at as much as 10% later this year.
Businesses have also been challenged with soaring costs as factory input prices increased by 18.6% over the past year, marking an all-time high. Feeding into inflationary pressures companies have been forced to raise their prices.
According to Barclays’ SME Barometer, nearly three-quarters of small- and medium-sized British firms are worried over the long-term impact of the cost of living crisis, swelling energy bills and increasing inflation.
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