Most small businesses fear long-term repercussions of the UK cost of living crisis | cost of living crisis

A survey found that three-quarters of small and medium-sized businesses are concerned about the long-term impact of the cost-of-living crisis, rising energy bills and rising inflation on their businesses.

Just over half of SMEs (51%) said they were concerned that higher prices would affect consumer spending, in response to the Barclays SME Barometer, a quarterly business sentiment survey conducted for the bank.

High energy bills and rising raw material costs are putting pressure on companies and creating a difficult business environment.

More than a quarter of the 574 companies surveyed said they fear having to raise their prices in response will make them less competitive.

They report that the tight labor market is putting more pressure on companies, with some struggling to recruit new employees. Recently, companies across a range of industries, from nurseries to nightclubs, have reported problems finding workers to fill vital roles.

However, the four-day banking weekend marking the Queen’s platinum jubilee provided a rare bright spot for small and medium businesses, which said they believed sales would pick up during the break.

The bank holiday in late May was moved to June 2, bringing an extended break from then until June 5, as part of a year of events marking the first time the British throne has acceded to the throne in seven decades.

Independent pubs, bars and restaurants are anticipating an increase in sales of around £76m over the jubilee celebrations on Thursday and Friday.

Companies that responded to a Barclaycard survey expected the festivities to boost their revenue. Six out of 10 small and medium-sized businesses said they expected an average of 10% higher sales between April and June compared to the same quarter a year earlier.

Hospitality and leisure companies also expect revenue to be a third (35%) higher during the three-month period than in 2021, when they reopened as Covid lockdown restrictions eased.

While some SMEs are positive about their own prospects, nearly half said they are pessimistic about the outlook for the broader UK economy, while two-fifths report that the current business environment is unstable.

Sentiment about business prospects and stability has subsided since the first quarter, and has been well below levels seen in early 2021, although this was a period when many coronavirus restrictions were still in place.

Companies’ concerns about the future economic environment follow the successful first quarter of the year, when more than half reported higher sales compared to the last three months of 2021.

These numbers are buoyed by the volume of debit and credit card payments processed for SMEs, which saw a 20% increase in value and a 35% increase in volume between January and March compared to pre-pandemic levels, according to Barclaycard Payments figures. She said the significant growth in spending with small and medium-sized businesses can be attributed in part to the rapid shift from cash to card payments that she has seen during the pandemic.

“After an exceptionally difficult time for the hospitality and leisure sector, it is encouraging to see businesses have seen an uptick in revenue over the past few months, despite the challenging economic climate,” said Colin O’Flaherty, Head of Small and Medium Business at Barclaycard Payments.

Ross Robinson, owner of The Queens Pub and Hotel in Lytham, which will host the Jubilee event, said the extra bank holiday should give the company a chance to take advantage of warmer weather and people’s willingness to go outside.

“We hope the public will take this time to support businesses in their local area, to help increase sales during a period when the overhead costs of running a business are at their highest in many years,” he said.