By Jennifer Sieg
A fear for the health of the UK economy has caused mid-sized businesses to remain cautious of a fall in customers and spending, new research shows, with one sector in particular coming in with above-average worry.
According to accountancy and business advisory firm, BDO, the fear of falling numbers within the hospitality and leisure sector is now at 41 per cent.
It comes as the latest BDO High Street Tracker highlighted that in-store and online retail sales were negative in the last three months of 2023, a time many consider the “golden quarter” of the year.
Despite a fear for numbers in the next six months, growth and expansion remain a top priority for some 20 per cent of small businesses.
“It’s heartening to see businesses remain optimistic about some expansion and growth on UK soil,” Richard Austin, partner at BDO LLP, said.
However, Austin said targeted government support is needed to combat a challenging market.
More than a quarter of the BDO-surveyed small businesses said an improvement inaccess to finance would be helpful, with 28 per cent raising concerns over higher monthly repayment costs and “depleting” cash reserves.
“A clear focus is needed to improve access to capital, manage high-interest rates and reduce borrowing costs over the months ahead,” Austin said.
“Their growth will play a key role in the recovery of the UK economy.”
Martin McTague, national chair at the Federation of Small Businesses (FSB), said: “Our research shows more than half of small hospitality businesses being confronted with a significant increase in their running costs – of more than 10% – in the last year.
“Perhaps understandably, confidence levels in the sector are the lowest compared to other major sectors.”
McTague said the government should “look at the whole picture,” suggesting an increase in Employment Allowance and lifting the VAT threshold to £100,000, which currently sits at £85,000.
The government was approached for comment.
