Economy

Majority of SMEs believe UK is headed for deep recession post-pandemic

Almost seven in 10 (69%) small business owners believe the UK is heading for a deep recession following the coronavirus pandemic and resulting lockdown, according to new research from FreeAgent.

In addition, almost three quarters (73%) believe many small businesses will struggle to make enough money to survive and two thirds (65%) think many small businesses will be forced to cease trading altogether.

The FreeAgent survey revealed that the vast majority of respondents have been impacted by Covid-19, with 87% stating they have suffered, and over a third of those (35%) stating their business had been “completely disrupted”, to the point where they can do little to no work at all.

The firm said the Chancellor’s support for small businesses and the self-employed has also come under some criticism, with just over a third (35%) thinking the UK government has done enough to help small businesses deal with the impact of coronavirus. The research also found that:

  • 49% of respondents have not applied for a government grant or loan because they either did not meet the criteria (40%), did not know whether or not they qualified (5%) or thought the process would be too complicated (4%)
  • Just 44% said they had applied for a grant, or loan, or both
  • 53% believe higher taxes will be introduced for the self employed

However, 39% of respondents stated they believe there will be new opportunities to grow their businesses after the pandemic.

While almost one fifth (18%) believe the economy will get worse for a short time but quickly bounce back, 70% of respondents said they believed this will lead to greater work flexibility and preferred remote working.

Ed Molyneux, co-founder and CEO at FreeAgent, said: “It is very clear the devastating effect the coronavirus pandemic has had and is still having on the UK’s small businesses and self employed.

“These are incredibly challenging times for everyone. Small business owners are a catalyst for innovation in the UK, but in order to survive this period, they desperately need protection and support so that they do not go under.”

He added: “The loan scheme, while seemingly positive in theory, must be accessible, and it is very concerning that many of our respondents say they haven’t applied for a loan – or don’t even  know whether they qualify for one in the first place.

“While it is encouraging to see that almost a fifth of respondents believe Covid-19 will only lead to a short-lived dip in the economy, almost four fifths clearly see this as being a longer term problem for their business. And that’s without considering the impact of any subsequent lockdowns due to a second wave of infections.”

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