By Jack Barnett
Swelling energy bills and a softening UK economy have sparked a surge in small business closures in London, exclusive figures shared withCity A.M. reveal.
The number of SMEs that have disappeared in the capital swelled to 53,880 this year, up sharply from 37,350 in 2017, according to analysis of Office for National Statistics figures by the Liberal Democrats.
SME closures in London are nearly double the 27,405 registered in Scotland, Wales and Northern Ireland over the same period.
The figures illustrate how roaring inflation and higher costs are forcing small firms to the wall.
Consumer inflation is running at 9.9 per cent, the highest in 40 years, while input prices are up 20 per cent.
“London’s tech entrepreneurs who power growth desperately need a helping hand, instead they’ve been strangled by years of economic chaos,” Liberal Democrat MP and treasury spokesperson Sarah Olney said.
“The Conservative government are ignoring the plight of London’s small businesses. Rather than growing opportunities in the capital, these figures show the government has done the opposite,” she added.
Financial market turmoil
Turmoil on UK financial markets sparked by prime minister’s Liz Truss’s botched mini budget in which she and her former chancellor Kwasi Kwarteng launched £45bn of unfunded tax cuts will heap even more pressure on businesses.
UK gilt yields have surged, likely forcing banks to charge more for loans to protect their margins. Yields and prices inversely.
The Bank of England is set to lift interest rates by at least 100 basis points at its next meeting on 3 November, with governor Andrew Bailey hinting over the weekend borrowing costs need to tighten sharply to ease market concerns over the UK’s financial credibility.
Truss has since rolled back on plans to reverse the six percentage point corporation tax rise, thinning firms’ margins even more. New chancellor Jeremy Hunt over the weekend said taxes will have to rise.
Separate research carried by small business lender Iwoca shared exclusively with City A.M. reveals businesses are being forced to pass higher costs on to consumers by raising prices.
Over one in three companies have hiked prices. Businesses’ finances are likely to be hit by consumers responding to those price rises by slashing spending.
A government spokesperson did not respond in time to a request for comment.
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