- Federation of Small Businesses (FSB) calls for government analysis of planned hike to National Insurance contributions (NICs) as Small Business Index (SBI) shows hiring intentions dropping
- Exports tumble, with few fully prepared for imposition of import checks; finance applications hit six-year low
- UK’s largest business group recommends increasing the Employment Allowance and relaunching the SME Brexit Support Fund
FSB is urging the Treasury to look at what its plans to increase employer, employee and sole trader NICs, as well as dividend taxation, by 1.25 percentage points in a few months’ time will mean for jobs in businesses.
The call comes as the latest full SBI report, published today, shows one in seven (14%) smaller firms reducing headcounts in Q3 2021, despite furlough still being in place, up two percentage points (pp) compared to the same period in 2019, before Covid hit.
Among the nearly 1,400 survey respondents that inform the study, the vast majority (82%) are not planning to increase staff numbers this quarter. The figure is up 3pp on Q2 of this year when economies were starting to unlock.
With a new EU-UK trade agreement now in effect, supply chain disruption ongoing and shipping fees rising, four in ten (41%) exporters report a drop-off international in sales last quarter, up 10pp on the same period in 2019.
Only one in five (21%) are fully prepared for the introduction of import checks next year. The same proportion (21%) have temporarily or permanently stopped exporting to the EU – a further 7% are considering doing so.
Elsewhere, the volume of small business finance applications has hit a six-year low – just one in ten (10%) have sought new facilities over the past three months. The share having applications approved (52%) has dropped 18pp from Q3 2019. More than half (57%) were offered borrowing rates of 5% or more.
The UK SBI reading stands at +16.4 in Q3 2021, down more than two points on last quarter (+18.6) and almost nine points on Q1 (+27.3).
FSB National Chairman Mike Cherry said: “Small business confidence surged at the start of this year but – following the announcement of a jobs tax hike – that resurgence has run out of steam.
“What we’re left wondering is: where is the Government’s assessment of what April’s tax increases could mean for unemployment?
“The tax rises will be hitting at the same time as a rise in the living wage, and against a backdrop of surging inflation and supply chain disruption, so we need to know how the Government is analysing potential repercussions.
“We put together our own estimate and found that the jobs tax increase could cause 50,000 more people to become unemployed. All we’re asking is for the Treasury to publish its own forecast.
“With employment intentions subdued among small firms – which were the most reliant on the furlough scheme – we urgently need to see the Government increase the Employment Allowance to help community businesses recruit, retain and reskill over the coming months.
“Equally, too many small exporters – often our most innovative and profitable firms – are struggling to get across new paperwork and preparations for import checks.
“As such, policymakers should revamp and relaunch the SME Brexit Support Fund, widening the eligibility criteria, and making deadlines for applications more realistic.”
Ends
Notes to Editors
1) FSB surveyed 1,383 small businesses for the Q3 SBI between 21 September and 1 October 2021. Statistics are based on a weighted analysis of survey results. Weighting is applied to ensure figures are representative of the UK’s business population.
2) The SBI survey covers a range of economic indicators including: small business confidence, employment and wages, exports, productivity, spare capacity, finance and investment. The SBI is conducted by independent research company Verve. The headline SBI confidence figures are based on a weighted index, with the share of firms reporting ‘much improved’ or ‘much worse’ confidence allocated double weighting.
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About FSB
As the UK’s largest business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed.
FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.