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Monday, October 2, 2023

UK Small Businesses Are Taking a Back Seat Due to Cost of Living Squeeze

92% of companies reported higher expenditures in the first period of this year

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Hrishita Chatterjee
Hrishita Chatterjee
Covering culture and trending topics

UNITED KINGDOM: Economic growth is at a standstill in Britain in light of small businesses giving out messages about the cost of living squeeze, with two out of five company bosses stating the prevailing low sales at the commencement of 2022. 

According to the Federation of Small Businesses, although bosses’ belief in the economy increased before the summer, activity continued to be pushed back by expanding expenditures and weak demand from consumers.

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The FSB’s national chair, Martin McTague, stated, “Small businesses may be set to turn the turnaround and bounce after the epidemic and the energy crisis, with confidence returning and optimism for the second quarter improving.” 

“However, there are several dark clouds on the horizon that could stymie small business recovery. The likelihood of more interest rate increases is causing considerable concern, as costs remain extremely high,” Martin added.  

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In the first period of this year, a record 92% of companies reported higher expenditures than in the same period last year, as shown by the most recent snapshot of its small business index.

Two out of five small businesses expected a rise in sales for the coming month after a challenging start to the year. Business owners of about 150,000 and self-employed workers asked questions to approximately 700 people. 

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After falling at the end of last year, the FSB said that company optimism was now increasing, but it offered an advisory that there were still “dark clouds” on the horizon. Small enterprises may not recover as rapidly as they would like as a consequence of more Bank of England interest rate hikes, rising prices for raw materials, electricity, and transport, as well as developing staff wage costs.

The Bank’s rate of interest is expected to increase from its current level of 4.25% as a result of March’s inflation continuing above 10%, which is more than five times the central bank’s goal rate of 2%. Its small-business index improved to a reading of -2.8 in the first quarter, up 43 points from the preceding three months of 2022 but still roughly 18 points below the same period a year previously.

Also Read: Survey Reveals How 50% of Businesses in UK Are Affected by Climate Change 


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