The cost-of-living crisis may lead to massive business failures, according to new research. A huge number of Britain’s small businesses may fail in 2023 amid pressure from skyrocketing prices, Sky News reports.
Around 630,000 small and microbusinesses in Britain have raised concerns that they may have to fold this year due to spiraling costs, Sky News reported on Monday, citing a study by website builder GoDaddy. Their collapse could reportedly wipe £12 billion ($14.4 billion) out of the economy.
More than three-quarters of survey respondents described the cost-of-living crisis as the biggest challenge they have ever faced, calling the price of energy their single biggest concern.
Microbusinesses, which are typically firms with fewer than 10 employees, represent 96% of all businesses within Britain’s private sector, according to GoDaddy’s UK manager Andrew Gradon.
“They are the lifeblood of businesses in the UK and it’s them that are on the frontline, very much feeling the direct impact of the cost-of-living crisis,” he was quoted as saying by Sky.
“Around 42% said that they wanted support with tax incentives but are also looking more broadly to business support – so looking at technical assistance for business development as well as support for digital strategy,” Gradon noted.
Meanwhile, a government spokesperson acknowledged that companies have been struggling with energy bills, noting that the government is providing businesses with billions of pounds in support.
“This support means some will be paying around half of predicted wholesale energy costs this winter,” he told Sky, adding that the government has “pledged further energy support from April onwards.”
In September 2022, the British government introduced the Energy Bill Relief Scheme, which has reportedly provided £18 billion ($22 billion) to businesses to help with soaring energy costs. However, the plan is due to come to an end in March, and a new support package will reportedly see funding reduced to £5.5 billion ($6.5 billion).