UK small businesses give their views on the economy

ended 29. June 2021

Tax hikes are seen as the biggest threat to the UK's economic recovery, say small businesses

Government tax hikes to pay off the sizeable debts incurred since the beginning of the Covid-19 pandemic represent the biggest threat to the UK economy moving forward, according to a poll of over 1000 small business owners by news platform, Newspage.

Newspage polled its users between 28 and 29 June 2021 about what they believe represents the primary threat to the country's economic recovery. The results were:

  • 39% of those polled said the need for the Government to start paying off the debts accrued over the past 18 months represents the biggest threat to already stretched businesses
  • 35% of respondents said the end of the Government's furlough scheme poses the biggest challenge, and could lead to a sharp rise in unemployment
  • 26% said the Bank of England being forced to raise interest rate to contain rising inflation is the biggest challenge the country faces

Dominic Hiatt, Founder, Newspage, commented:

A lot of small businesses have been stretched to breaking point since the pandemic began and a clear worry is that tax hikes too soon could cripple them and send the economy into a deep and protracted recession. We all know tax hikes are coming, but the Chancellor has to ensure the timing is absolutely perfect or the fallout could be unbearable as already leveraged small businesses buckle under the strain.

Newspage also sought the views of its small business users during the poll. 14 alert_responses are listed below.

14 responses from the Newspage community

Star Quote
"Businesses go bust on the way out of a recession, not on the way in. We still have time to buckle our seatbelts and find a way to dodge the full financial impact of the pandemic. I'm predicting difficult times for many companies during the next 12 months, with interest rates rising and inflation potentially wreaking havoc. Businesses in some industries and sectors will continue to thrive, but for many the furlough scheme has merely delayed the inevitable. There are always winners and losers, and while I am confident we'll bounce back, I think we have a journey to get through first."
Star Quote
"Though we might be through the worst of the pandemic, the economic after-effects are only just beginning. The immediate risks to our economy are a rise in inflation, rising interest rates as a result, and the end of the furlough scheme, which could see unemployment soar and speed up bankruptcies across large and small companies alike."
Star Quote
"Medically, we are well along the pandemic curve, but in economic terms, we are only at the beginning. Rishi Sunak has warned on several occasions that tax rises will be needed to pay back the huge debts we’ve incurred during Covid-19, and the only question is when the great payback begins. "As a business that hasn’t received a penny of Government aid, the prospect of ‘paying back’ a debt through huge tax hikes is galling. We’ve only just finished round one of the pandemic prize fight."
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"Furlough has masked the country's true economic state. What happens when that support ends? Almost certainly, rising unemployment, a fall in consumer spending and recession, potentially a devastating one."
Star Quote
"The worst has yet to hit us and I think that as the furlough scheme closes there will be a massive impact, with unemployment rising sharply. Many organisations have kept on staff through the scheme simply to give them a wage and will undoubtedly need to make a good proportion of staff redundant. "At some point in the not-too-distant future, Rishi Sunak will stop being the 'good news fairy' and the reality of burgeoning tax bills will start to hit home. For small companies who have spent the past year and a half clinging on to save their businesses, this could be the final nail in the coffin."
"We are nowhere near the worst of the economic turbulence to come as a result of the pandemic, a turbulence, let's not forget, turbocharged by Brexit. We're about to find out how much nous the Government has really got. "The main reason we've not yet seen the worst economically is because so many people have been protected by QE and state support. When furlough draws to a close, we'll start to get a real indication of the impact of the pandemic and it's likely unemployment will rise. It usually takes at least six months for it to filter through to the real economy. "We could be facing a perfect storm of rising unemployment, shrinking tax receipts, an increase in welfare spending along with rising inflation due to Brexit. Lets just hope I'm very far off the mark."
"There's every chance the economy will bounce back strongly as the pandemic comes to an end. Many households have saved significantly over the last year or so, and pent up demand exists for holidays, meals out, entertainment and downright fun! There is a very real prospect of a 21st Century 'Roaring 20s'."
"History tells us that we are about mid-way through the pandemic, but history can't tell us exactly what will happen next. For this reason, I suspect that we are through the worst economically although the foreseeable future is not clear with the possibility of continuing restrictions through this winter. As with all 'economic quakes', many unsustainable businesses have been lost, leaving UK PLC with the strong survivors and the green shoots of startups. This should give us much hope economically with the only concern being the possibility that business will be targeted with punitive taxation to repay the recently accumulated debt."
"Furlough has enabled many businesses to continue, with little or no demand for their products and services. If only there was a magic switch that meant that furlough gets turned off and demand gets switched on. Unemployment in some areas and sectors will be devastating: active support will be needed for those affected or worse will follow."
"I'd like to think we are through the worst of the pandemic economically, but I have a cautious eye on late Autumn, when I wonder if there will be another Covid/flu pandemic, which could hit the elderly and clinically vulnerable population hard. "Will this lead to an Autumn shutdown? I hope not, but if I were a betting man, I wouldn't bet my house against it. On the positive side, the general mood in business at the moment is that confidence has returned to the fore, people and companies are spending money, so with a fair wind we could all be heading for a bumper end to 2021. The big unknown is when the Chancellor will decide it is time to recoup the money spent on the furlough scheme and other pandemic support measures. How this is handled by the Government will be crucial to how the economy emerges from the pandemic."
"Being a glass half-full type of person, I believe we are over the worst of the pandemic, provided the vaccine programme continues worldwide and no more aggressive variants appear. No doubt there will be some hurdles, painful challenges and some big shifts ahead, but together we will get through this: slowly but surely."
"We're nowhere near through the worst in economic terms. The irony is that furlough ending could be a positive as it will at least force businesses to take proactive action in terms of their employment decisions, rather than choose to ignore it and rely on an unsustainable scheme. "Speaking as a business owner myself, a far bigger issue than the end of furlough is the double whammy of increased debt that many small businesses are now having to carry and the threat of increased taxes. Having hustled our way through all of this, with little to no support for many SMEs, we now have the threat of rising debt, increased taxes and the continued uncertainty of what will happen if we 'lock down' again due to more devious variants."
"While the furlough scheme has supported many businesses, it has also demoralised many people and they want to feel productive and valued again. "One positive is that small businesses can quickly adjust their vision and goals, so now is the time for them to take some brave steps. "The UK manufacturing sector is showing some positive signs of regenerating itself and talking about building more resilient supply chains. "The pandemic will continue to produce aftershocks, but if the Government is focused not just on big-ticket industry but smaller enterprises, which make up 95% of UK plc, then the economy will build steadily."
"I believe that we are through the worst of the pandemic economically, but we now need people to be out and about in the UK and spending. Our retail shops have been through so much turmoil so we need to salvage this or we risk losing them. "It will take many years to build our country up again and we need the Government support to get through this and the big challenges that we face such as Brexit, which is directly affecting our ability to fully trade with other countries."