A Sword of Damocles hangs over small businesses in the vital run-up to Christmas, experts warned.
In a stark warning, the Federation of Small Businesses (FSB) said that supply chain hold-ups, staffing shortages and tax rises threaten to squeeze firms.
The lobby group has urged ministers to ease the pressures faced by the thousands of firms making up the backbone of Britain’s economy.
Warning: The Federation of Small Businesses, which is calling on ministers to ease the pressures faced by the thousands of firms making up the backbone of Britain’s economy
They are battling through a litany of problems caused by the pandemic, the FSB said, and companies which have struggled through Covid could now be forced into insolvency if the Government pushes ahead with tax hikes and the withdrawal of support.
Chaos caused by the pandemic in global trade means shipping costs are soaring, while some goods are stuck in ports because there are too few lorry drivers to move them to warehouses.
Toy company Character Group, told the Mail its shipping costs had rocketed by as much as six times over the past year.
Other companies, from retailers to restaurants, are struggling to hire staff, as university students are less likely to take on part-time work and many overseas workers have gone home.
And now businesses have another hurdle approaching, as the Government has increased the rate of National Insurance which they must pay from next year.
This week alone, tonic maker Fever Tree, hobby group Hornby, and figurine firm Games Workshop have all warned of pandemic-related problems.
Mike Cherry, national chairman of the FSB, said: ‘Supply chain problems are hitting hard alongside spiralling employment costs and staff shortages, while the consumer-led recovery could be losing steam.
‘News that the Government’s regressive jobs tax will place 50,000 people out of work could not come at a worse time.
‘Retail businesses are nervous about their peak Christmas season, with an opaque winter Covid plan likely to see trade restrictions installed at just a week’s notice. It feels to many like a Sword of Damocles with a difficult winter ahead.’
Kiran Shah, managing director of Character Group, said businesses were facing a ‘perfect storm’.
The company would usually expect to make the first delivery of its Christmas toys to retailers in August.
‘We just don’t have sufficient goods to supply,’ he said. ‘Freight rates and shipping costs are through the roof.
‘A 40-foot container from the Far East to the UK cost $3,000 to ship last November. This month it’s $18,000.’
Cherry has urged the Government to raise the Employment Allowance, money which small firms can claim to offset their National Insurance contributions.
He has also called on ministers to give further help exporters, get their goods across the UK border.
