Responding to the announcement that the number of underlying company insolvencies in Q2 2019 increased by 2.6% to the highest level since Q1 2014 in England and Wales, Federation of Small Businesses (FSB) Policy & Advocacy Chairman Martin McTague, said:
“These latest figures are hugely concerning, highlighting the immense strain that small businesses are under with rising employment costs, business rates and sustained political uncertainty.
“The construction sector, notoriously dogged by late payments, has seen the biggest share of insolvencies, with more than 3,000 firms going under in the year ending in Q2.
“Other labour intensive industries – administration, hospitality and retail – are also suffering as they struggle with higher wages, pensions auto-enrolment costs and skills shortages. Our latest confidence index shows confidence within the construction, wholesale and retail sectors is in deep negative territory.
“Uncertainty is now severely weighing on small firms and the self-employed, making it harder for them to invest, plan and grow. Central to this is the unknown nature of what the UK’s future relationship with the EU will look like and the growing risk of a cliff edge no deal Brexit on October 31, for which smaller businesses are simply not prepared.
“Smaller firms are under the cosh more than ever and it’s time for interventions to help prevent more businesses becoming insolvent.
“The Government’s words on Brexit preparedness need to be matched by actions: the automatic issuing of Economic Operator Registration and Identification numbers to VAT-registered firms that currently trade goods exclusively with the EU and access to Brexit vouchers to help smaller businesses to prepare for a no deal scenario on October 31.
“There’s a real danger that a chaotic, sudden no-deal exit on 31 October will cause insolvencies to spiral further, meaning a significant hit to UK economic growth.”
