Scotland ranks top in UK for level of SME-owners considering folding their firm

Scotland has come top among parts of the UK for the level of owners of small businesses considering closure due to cost-of-living pressures – and action is being urged to provide additional state support.

Business financial platform Tide says it surveyed almost 2,000 of its small and medium-sized enterprise (SME) members following the recent mini budget. It found that north of the Border, 31.8 per cent of business-owners are considering closure, followed by Wales at 30.9 per cent, and the North-east of England at 29.2 per cent – compared to the UK-wide average of just under a quarter.

The report also shows that fuel/energy prices and inflation are the top and second-biggest things respectively that are worrying SME owners across the UK. Nearly half of those polled said fuel and energy costs remain their biggest concern – despite the UK Government in September unveiling an energy support package for companies over the next six months – although the proportion was down from 57.2 per cent in June.

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'The number of small-business-owners considering closure remains worryingly high, especially in Scotland and Wales,' says the firm behind the report. Picture: Getty Images/iStockphoto.
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Concerns that inflation will not ease off is now the number one concern for 26.2 per cent of surveyed firms, up from 22.4 per cent in June, and fears over rising interest rates have also grown, with 6.6 per cent flagging it as their top worry, up from 4.8 per cent, amid expectations that the Bank of England will impose a “significant” further raise in November, Tide added.

In terms of state support, the survey found that the UK Government’s recent mini-budget had not improved the confidence of small business owners, with more than seven in ten saying it hadn’t helped, and when asked about some of the specific non-energy measures, two fifths said none of them would benefit them or their business.

Oliver Prill, chief executive of Tide, which says it has more than 450,000 SME members in the UK, said: “While the energy support package has had some positive impact for small businesses, more needs to be done to help them. Many of the measures announced in the mini-budget were aimed at larger companies.

"There have been interesting ideas floated about reducing the regulatory burden on small businesses, however, we urge the [UK Government] to look at specific actions to help [such firms], such as VAT relief, and provide help to switch to renewable energy.

Worrying

“Overall, the macro-economic situation means the number of small-business-owners considering closure remains worryingly high, especially in Scotland and Wales. Unless we see significant improvements in the cost of energy and inflation reduction, any government intervention will not create the kind of growth in the SME sector ministers say they want.”

Separately, new purchasing managers' index data published today by Royal Bank of Scotland (RBS) shows business activity across Scotland's private sector having contracted again in September. The seasonally adjusted headline RBS business activity index – a measure of combined manufacturing and service sector output – last month came in at 48, “little-changed” from 47.8 in August, with the lender noting that this signalled a second consecutive month of contraction.

Judith Cruickshank, chair of the Scotland board at RBS, said: "The post-pandemic boom is clearly at an end, as the ongoing cost-of-living crisis plays an increasingly important role. Moreover, the 12-month outlook continues to weaken.”

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