3 minute read
FSB
The squeeze on small business and household budgets from inflation is undermining chances of an economic recovery.
Responding to the news that the consumer prices index rose to the highest since records began in 1997, and producer price inflation rose 22.6% in the 12 months to July, FSB national chair Martin McTague said: “We’re seeing a toxic cocktail of rampant inflation, high taxes, soaring energy costs and shrinking economic growth. Action is needed right now.
“While the consumer prices rate of inflation bursting through 10% is eye-watering, producer input prices are up by more than double that figure and this will filter through, pushing up the cost of living even more.
“The cost of living crisis can’t be solved without addressing the cost of doing business crisis.
“That’s why we need to see a reversal of the hike in National Insurance, a cut in VAT and fuel duty, and help for struggling small firms on energy bills to match that being given to households. “The rise in food and non-alcoholic drink prices contributed strongly to the growth in the consumer inflation rate, hitting across the board – we all need to eat.
“Hospitality businesses are also feeling the pinch – from the B&B owner who now has to pay 50p per slice of bacon to the bar which has seen prices for mixers and soft drinks spiral. “While small businesses do their absolute best to offer good value to customers, they will be squeezed to the margins as consumers’ disposable spending falls.” FSB research sets out the effect the current economic climate is having on small businesses, with more small firms reporting a decline in revenues in Q2 than an increase (40.7% against 34.8%). Expectations for any betterment in performance in Q3 are similarly subdued, with those predicting a fall in revenue (35.8%) outnumbering those who predict an increase (32.4%).
FSB’s new publication, Paying a premium? Reforming the insurance market to work for small firms, examines the issues small firms face when navigating the insurance market and looks into the price of insurance and whether the products on offer are suitable for small business customers.
ARE YOU “PAYING A PREMIUM?”
The findings expose concerns about whether the insurance market is performing adequately for small firms and self-employed people.
With high inflation putting general pressure on small firms’ bottom lines, the report’s finding that a clear majority (60%) have seen their insurance premiums rise in the last year is an illustration of the cost squeeze facing small businesses, who cannot in most cases operate without various forms of cover.
Over half (52%) of those whose premium costs have risen say that the rise is 11% or greater, while some individual businesses have seen cost rises far in excess of that – particularly following a claim.
The pandemic brought many underlying problems with insurance into sharp relief, as small firms had to fight hard for their business interruption insurance to be honoured, leading to significant uncertainty and worry at a time when they were already fighting to survive.
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