Critical Spring Budget for SMEs: 31% of business owners fear closure by end of 2024
In a recent survey conducted by invoice finance company Novuna Business Cash Flow https://www.novuna.co.uk/business-cash-flow/invoice-finance/, involving 500 small and medium sized enterprises, a startling 31% of business owners anticipate the potential closure of their businesses by the end of 2024. This statistic underscores the significance of the forthcoming Spring budget, positioning it as potentially one of the most critical in recent years.
The prospect of numerous businesses facing closure is sobering, a reality underscored by a recent ONS report, showing just 3% of businesses had temporarily halted trading in the month of February 2024, with only 2% having shut down permanently.
The findings also shed light on the challenges leading to potential business closures. Since the last budget announcement in November 2023, a notable 46% of businesses reported a decline in demand for their products or services as the chief cause of reduced profitability. Closely following this, 32% of businesses are wrestling with the burden of increased utility costs, while 28% are navigating through cash flow pressures.
Despite these challenges, there remains a strong determination among businesses to persevere, with 62% of businesses likely to implement cost-cutting measures to sustain their operations. Nevertheless, such strategies may lead to significant restructuring, including redundancies, which 25% of SMEs anticipate will be necessary by the end of the calendar year.
However, the confidence in the government’s ability to address these concerns through the upcoming budget is notably low, with 47% of businesses surveyed expressing scepticism, believing that the government’s plans will have no impact on their current predicaments.
With a significant portion of the business community at risk, the government’s upcoming fiscal policies will not only shape the economic landscape but also signal its commitment to supporting the backbone of the economy. The question remains: will the 2024 Spring budget offer the much-needed support to SMEs, or will it fall short of addressing the critical challenges they face?
John Atkinson, head of commercial and strategy at Novuna Business Cash Flow, commented on the recent survey findings, “This survey exposes significant concerns among business owners, particularly highlighting that 28% are grappling with cash flow pressures in these challenging economic times. It underscores the urgent need for a budget that truly addresses the needs of small and medium-sized enterprises. As vital pillars of our economy, known for their innovation, employment opportunities, and growth, their struggles emphasise the necessity for government policy to be closely aligned with their real-world needs. The forthcoming budget presents an invaluable chance for the government to show its commitment to supporting SMEs and, by extension, the broader economy.”