Half a Million U.K. Small Businesses Could Go Bust Within Weeks

The President of the UK’s Federation of Small Businesses Martin McTague has warned that many small businesses will eventually go out of business if they do not receive any financial support from the government.

Image Credit: Lamlch


The comments come after the UK’s inflation hit 9% in March - the highest level since 1982. There are a number of contributory factors to the increase in inflation: currency creation during the Coronavirus pandemic; skyrocketing energy costs because Europe tries to cut itself off from Russia’s fossil fuels; as well as monetary tightening by the central bank.

This toxic combination of skyrocketing energy prices, a collapsing pound, sputtering growth, a declining environment for small businesses, declining households, trade barriers with Russia, a central bank that is tightening, and overall inflation at four-decade highs have all produced a terrible environment for the UK economy.

The president told BBC Radio 4’s Today: “there is still a massive problem with small businesses. They are facing something like twice the rate of inflation for their production prices, and it’s a ticking time bomb. They have literally weeks left before they run out of cash and that will mean hundreds of thousands of businesses, and lots of people losing their jobs.”

McTague said that: “It is a very real possibility because … they don’t have the cash reserves. They don’t have any way they can tackle this problem.”


McTague pointed to Office for National Statistics information which shows 2 million of the UK’s small businesses only have under three months of savings in order to continue operations. He then went on to claim that 200,000 small businesses were in a very serious situation; while 300,000 can only remain up and running for a few weeks.

McTague talked about a hotel owner in Scarborough: an English resort town, whose skyrocketing power bills force the hotel to pay five times over the normal rate - which wiped out the establishment’s profits.


According to the FSB President: “They weren’t able to trade any longer without essentially trading at a loss and therefore damaging the future of their business and everybody that worked for them.”


ONS information shows that the economy shrank by 1% in March and the U.K. will enter recession by the end of 2022 according to a declaration made by the Bank of England and Rishi Sunak. Soaring inflation and sputtering economic growth is already crushing small-to-medium-sized businesses and homes throughout the nation.


Barclays’ small to medium sized business barometer shows that around 75% of companies in the U.K. are concerned about the difficult environment and its impact on operations.