1 in 3 SME owners say UK economy could take 10 years or more to recover

3 in 5 UK SME owners say their business has been negatively impacted by the pandemic and 168,200 are likely to shut down within a year, reveals new research from accounting software provider for small businesses, FreeAgent.

The survey explores whether SME owners have leveraged government support during the pandemic, as well as their perception of the post-pandemic UK economy.

FreeAgent found that 1 in 3 (36%) small business owners think the economy could take 10 years or more to recover, while just 6% believe it will be back to normal within a year.

For UK SMEs specifically, the survey revealed less than a third expect to experience no business growth in the next 12 months, while 1 in 10 (9.7%) expect their business conditions will worsen. Furthermore, around 1 out of every 34 (2.9% – equating to approximately 168,200 small businesses across the UK) are likely to shut down within the year.

Conversely, 12% of small business owners say they have experienced a positive impact as a result of the pandemic, likely due to new opportunities created by the drastic lifestyle changes as a result of lockdown – while 1 in 5 (23%) say they have been completely unaffected.

For example, A third (29.4%) of small business owners say they enjoyed being able to wear more relaxed clothing and making food at home was also a popular outcome, with 1 in 3 (27.2%) saying they liked being able to make lunch from scratch in their own kitchen.

While the government has put measures in place to support small businesses, nearly half (47.3%) of small business owners across the UK do not think the government has done enough to help them deal with the impact of COVID.

However, 1 in 3 (33.3%) small business owners have leveraged government COVID grants, while a quarter (25%) have taken COVID loans from the government and a fifth (20.8%) have taken out furlough payments.

In search of additional support, 1 in 5 (20%) SME owners have gone to an accountant or bookkeeper for help and advice while around 1 in 20 (4%) say they sought financial support through bank or private loans.

Roan Lavery, CEO and Co-Founder of FreeAgent said: “The Covid-19 pandemic has taken a tremendous toll on small businesses, especially with regard to their mental health and wellbeing. However, this research puts the seriousness of the economic impact in plain light, and I am saddened to see the extent goes as far as negatively disrupting three in five small businesses, some of whom may not even be operating next year.

“The SME sector is one of the most, if not the most, vital pillars of our economy. With SMEs making up around 99% of all businesses it is essential that they have all the support they need to remain economically buoyant. This is more true than ever considering critical support, such as furlough, will be coming to an end this month.

“With this in mind, the period of recovery will be a critical time for the government to step up and ensure as much pressure as possible is alleviated for small businesses, so they make it safely not just through the coming months, but in the years and decades to come.”