Yahoo Finance COVID hit to UK small businesses set to exceed £126bn
The toll of COVID-19 on small and medium-sized enterprises (SMEs) in the UK is set to exceed £126.6bn ($175.6bn) — nearly double the initial estimate of £69bn projected a year ago as the UK headed into lockdown for the first time.
According to a study by small business insurance provider Simply Business, on average, SMEs have lost £15,673 each so far in earnings due to the pandemic and subsequent lockdowns, up from the £11,779 small business owners initially estimated that COVID-19 would cost in May last year.
A year into the global pandemic, SMEs now fear they will lose a total of £22,461 each on average, suggesting there are still more losses to come. Almost one in 10 (8%) expect the pandemic to cost them over £50,000 in total.
What’s more, over 840,000 SMEs are not sure their business will ever return to pre-pandemic trading levels, bringing a huge blow to both the small business community and the UK economy.
With six million SMEs in the UK, accounting for over 99% of all businesses, 33% of employment and 21% of all economic turnover, the total cost of COVID-19 to UK SMEs – set to exceed £126.6bn – has the potential to send ripples through our economy and communities.
Overall, 81% of SMEs still say they haven’t had enough support from government – with 41% saying they don’t feel supported at all and 40% believing they’ve had some support but not enough.
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In terms of financial support, over 2.2 million SMEs (37%) still haven’t been able to access government schemes and grants, seen by many as a lifeline to help small businesses through the pandemic.
For those that have been able to access government support, a third (33%) have been able to receive the Self-Employed Income Support Scheme, a quarter (26%) have utilised the Bounce Back Loan Scheme, and one fifth (18%) have accessed the Local Restriction Support Grant.
So far, only one in 20 (5%) have been able to make use of the business rates holiday, and just 3% have been able to use the Coronavirus Business Interruption Loan Scheme. Despite the government offering a range of financial schemes to support small businesses, it’s clear that many haven’t been able to access the vital help needed for their recovery.
Looking ahead, roughly half (54%) of SMEs believe the government’s roadmap out of lockdown has given them some level of reassurance to start planning the future of their business – leaving 46% still uncertain in the coming months.
In recouping the money lost during the pandemic, the majority predict it will take anywhere from 18 months to two years (18%), or two to three years (20%) to get back the money lost.
One in five (20%) think three years or more, meaning they might not return to pre-pandemic levels until 2024 or later.
When it comes to returning to pre-pandemic levels of trading, over 860,000 SMEs (14%) are not sure that their business will ever return to pre-pandemic trading levels, but others are more optimistic.
A quarter (25%) believe they will return to pre-pandemic levels by spring or summer 2022. Well over a tenth (14%) think faster, and predict they’ll be back to normal trading levels by the end of this year.
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Overall, over half (53%) of SMEs remain concerned about their business’ future, but hope to survive until the end of 2021.
Alan Thomas, UK CEO at Simply Business, said: “Beyond the unquestionable economic hit, we should also recognise that behind each of these small businesses is a small business owner – each with families, livelihoods, and dreams. The impact of the pandemic on so many of these individuals has been devastating, both financially and emotionally.
“While the government support packages have proven a lifeline to many small businesses through the pandemic, our research reveals that 81% of self-employed people feel it hasn’t been enough – with over two million SMEs unable to access any financial support."
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