Responding to Office for National Statistics figures showing that GDP fell by 0.3% in the final quarter of 2023, following a fall of 0.1% in the third quarter, Martin McTague, National Chair of the Federation of Small Businesses, said: “The news that we’re in a recession will just confirm what many small firms have been saying for some time now – it’s very tough out there.
“Our research found that confidence among small firms has been in negative territory for seven straight quarters, due to the energy price crisis and the knock-on impact on the cost of doing business. There are big differences between sectors, with the hospitality sector recording by far the gloomiest confidence score, underlining that economic pain and strain are far from equally spread out.
“Small firms are grappling with high interest rates, energy costs much greater than they were a couple of years ago, and weak consumer demand. Two in five small firms said their revenues decreased over the final quarter of last year, with only a third saying they increased, showing that the shine has definitely come off the so-called ‘golden quarter’, to small firms’ detriment.
“The Government needs to foster an environment where small firms can grow, to the overall benefit of the economy, and to put this period of stagnation and shrinkage behind us once and for all. We have set out an ambitious but achievable programme for small business growth at the forthcoming Budget.
“Uprating the Employment Allowance to keep it in line with recent raises in the National Living Wage, raising the VAT threshold from £85,000 to at least £100,000, bringing back tax-free shopping for overseas visitors, ensuring the future of the Recovery Loan Scheme to get funds to start-up and scale-up businesses, and bringing in a national Business Energy Advice Service to help small firms with eye-watering energy costs would all provide a launchpad for growth.
“Small firms have the drive and the potential to get the economy back up and running, and to put this period of economic decline firmly behind us.”
