Rising energy costs put two-thirds of South West small businesses at risk of closure

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Two-thirds of small businesses in the South West are at risk of closing due to soaring fuel and energy prices, according to a new survey.

The SME Insights report from small business insurance provider Simply Business found that 65% of SME owners in the South West say rising fuel and energy costs are putting their business at risk, while 36% said tax and national insurance hikes were their biggest concern, along with marketing and finding customers, difficulties in finding reliable and cost-effective supplies and increased competition in the market.

The report also found that a fifth of SMEs in the South West were struggling with a lack of funds or access to credit, further heightening the risk of closure.

The survey of over 1,000 small business owners in the UK reveals that more than half intend to raise prices by 6-10% in an attempt to combat rising expenses; while 78 percent call on the government to reduce the energy price cap and 29 percent argue for extending the VAT reduction.

As millions of businesses across the country face higher energy bills and declining purchasing power from overburdened consumers, SMEs in the food and beverage, hospitality and retail are most at risk, with the effects of the Covid-19 pandemic still being felt by many people. .

Over the past two years, 87% of small business owners in the UK have lost an average of £20,981 – with the total cost of the Covid-19 pandemic standing at £109.6bn and one business in six believing that she will never be able to recover financially.

Providing an analysis of the report, Professor of Economics and Public Policy at King’s College London, Jonathan Portes, said: “Besides rising prices, the main response to these negative business pressures is likely to be to simply retreat , to cut costs where possible, and get on with it: that is, suspending expansion plans and, for those with employees, reducing hiring, hoping that conditions will improve over time. course of the coming year.

“The crucial factor here is probably consumer confidence and demand. The latter has clearly been hit hard in recent months, but could recover if inflation subsides and real incomes return to growth.

“Fuel and energy prices are by far the biggest concern, and the main drivers here are global. However, conditions in the UK have been made worse both by Brexit and the recent fall in the pound, which is pushing energy prices even higher, as well as by the functioning of the energy market and the cap prices.

“The disconnect between the Prime Minister’s call for a ‘high-wage, high-productivity’ economy and the insistence that workers must accept deep real wage cuts is also not helping to improve consumer confidence. and businesses. While UK businesses remain resilient in the face of further economic turmoil, they need and deserve a more coherent longer-term strategy for the UK economy.

However, there is hope, with many business owners confident they can survive this period, even though the economy is expected to deteriorate over the next six months, providing a stark contrast to feelings of this time last year.

Simply Business UK CEO Alan Thomas added: “Our SME Insights report makes it clear that small business owners want and need government support, with three in five calling for a review or reduction of the price cap Energy.

“Representing over 99% of all UK businesses and contributing billions of pounds in turnover each year, small businesses are at the heart of our communities and are vital to our economy. And while it’s encouraging that the majority remain optimistic about their business’ chances, it’s clear that owners need help coping with the pressure of rising costs.

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