More than a quarter of British small businesses agree the government should simplify the tax process and also reverse the employer’s National Insurance increase, shows a recent report, highlighting that SMEs are less confident in the UK economy
A new report published by leading small business insurance provider, Simply Business, is revealing the lasting effects of rising prices and fluctuating consumer demand on this essential sector as National Insurance increases, reduced business rates relief and a stubborn inflation rate continue to impact the businesses.
One in five (18 per cent) SMEs fear they could be forced to close permanently if conditions don’t improve. A quarter (25 per cent) say they will need to use their personal savings to prop up their business.
12 months on from the introduction of a new government, SMEs are less confident in the UK economy. In 2023, just over a quarter thought the economy would worsen over the course of the year, but this has now increased to 50 per cent.
With the rising costs of running a business affecting half of small businesses, many are facing difficult decisions. 43 per cent say they will need to raise their prices as a result of rising taxes and minimum wage, with one in five (19 per cent) raising them by as much as 29 per cent in order to offset costs.
Yet for many, they are expecting a decrease in profits despite an increase in prices. In 2023, 43 per cent of small business owners expected an increase in profits, this has now dropped to 17 per cent.
The report also states that despite the hiccups, SMEs remain hopeful for the future. 57 per cent are confident about their prospects over the next 12 months. Although, a quarter (25 per cent) say they will have to use personal savings to prop up their business if the remainder of 2025 is unsuccessful.
Simply Business UK CEO, Julie Fisher said, “The first change of UK government in 14 years has seen running costs rise for small businesses, with changes to tax, business rates relief and minimum wage.
"Set against a background of sustained economic uncertainty – many small business owners have felt the need to react as our research reveals three quarters (74 per cent) plan to increase prices in the next 12 months.
“Yet, in a show of optimism that is so characteristic of this sector, SMEs remain hopeful. As we look ahead, over half of businesses remain confident about their future prospects. But for those that have an unsuccessful year, one in 10 could be forced to let staff go, while almost a fifth (18 per cent) may have to cease trading permanently.
“Seeing so many SMEs across the UK struggling is a serious cause for concern, not just for the founders of these businesses but for the British economy and our wider communities. We must do everything we can to protect, support, and celebrate their spirit and resilience.”