Small Businesses on the Edge: Fuel, Taxes, and a Bombastically Rising Bill of Interest
In a recent survey of more than a thousand UK SMEs, the biggest red flag that’s got business owners hopping on the safety belt is the soaring cost of fuel and energy. According to the SME Insights Report from Simply Business, a lightning‑fast 36% of respondents say the tax and National Insurance hikes are the biggest threat to their survival.
Why the Price War Is Already In Play
- 70% of owners believe rising costs are the toughest challenge this year.
- Nearly half (49%) are already planning to bump up their prices.
- About 21% will raise prices by 6‑10%, and 7% think they might need to go up to 20%.
Calling for a Government Fix
- Five out of eight (59%) are demanding a review or cut in the energy price cap.
- One in five (21%) wants the VAT cut to be extended or reconsidered.
- More than a tenth (12%) urge the government to reduce National Insurance.
Energy Caps: They’re Not Direct, But They’re Still Heating Up the Bills
Even though the energy price caps don’t directly touch business accounts, countless SMEs are still watching their energy bills climb. Coupled with consumers tightening their wallets thanks to rising domestic energy costs, the pressure is real—especially on the food‑and‑drink, hospitality, and retail sectors.
The Domino Effect on Small Business Revenue
- Consumers are cutting back on non‑essential spending, which means fewer customers for hospitality and retail.
- A shrinking consumer base means less purchasing power to break the post‑pandemic recovery plateau.
- Revenue dips could hit these small businesses hard, as they already face difficult operating costs across the board.
In short, if the government doesn’t step in, small businesses will keep wrestling with the ever‑rising cost of doing business — all while customers look out of doors and refuse to foot the bill. The next chapter? How will entrepreneurs adapt, or will they all look for a different job… or a cheaper stove?
Wider threats to SME survival
SMEs Feeling the Pinch: A 2022 Snapshot
The latest report claims that one in five small businesses (22%) may close this year because they can’t secure the cash they need.
Top Five Threats to Small‑Business Survival
- Fuel & Energy Costs – 54% of owners feel the blow of rising prices.
- Tax & National Insurance Hikes – 36% are wincing under the new tax load.
- Funding & Credit Issues – 22% worry they’ll run out of money.
- Marketing & Customer Reach – 26% find it hard to attract new buyers.
- Post‑Pandemic Recovery – 18% are still coming up for air after COVID‑19 losses.
Financial Fallout
On average, £20,981 has been lost per small‑business owner in the past two years—an absolute pain.
All told, the pandemic’s damage now stands at a staggering £109.6 billion. A shocking 16% (one in six) of entrepreneurs think they’ll never fully recover the money they’ve burned.
What’s the Bottom Line?
These numbers paint a grim picture: rising costs, higher taxes, and cash crunches threaten the very heartbeat of the country’s small‑business sector. The fight is on, and every entrepreneur is hoping to find a lifeline before the pressure finally snaps.
Green shoots of confidence
3 in 5 SME Owners Grimey About the Economy, Still Swinging Confidence
Sixty‑two percent of small‑business owners think the next six months will bring an economic downturn. Yet, surprisingly, most of them are still convinced their shops, restaurants, or online stores can weather the storm.
Past vs. Present: How Confidence Has Shifted
When the pandemic hit in September 2020, only 17% of business owners felt their companies would survive yet another lockdown. Fast forward almost two years later, and a 34% say they’re more confident about their future than 6‑12 months ago. In 2022, a whopping 71% were “very confident” in their prospects.
Professor Jonathan Portes Breaks It Down
- Practical Tactics: Instead of slashing prices, many businesses are hunkering down, trimming costs, and pausing expansion plans. For those with staff, hiring will slow until conditions improve.
- Consumer Confidence: The key driver is the mood of shoppers. A slump in confidence and demand could flip the tide, but if inflation eases and real incomes climb, buyers may start spending again.
- Energy & Energy Caps: The biggest headache is fuel and energy prices. Global dynamics, Brexit, a weaker pound, and market operations all push costs higher. Even though energy price caps don’t apply to businesses, the rise in bills is felt.
- Policy Gap: The UK’s “high wage, high productivity” slogan clashes with the reality of shrinking real wages. A coherent, long‑term strategy is needed to boost confidence and support small businesses.
Alan Thomas – UK CEO at Simply Business – Adds the Human Side
“Small business owners are hitting a breaking point,” says Thomas. “They’re fighting rising costs, energy crunches, and still dealing with the pandemic’s aftermath.”
- Energy Price Caps: Three in five owners are calling for a review or reduction of the energy price cap.
- Consumer Impact: Energy cost hikes and overall living expenses push households to cut non‑essential spending, which ripples into small‑business revenue.
- Financial Stress: The latest rate rise and recession warning loom over many. Sole traders and micro‑businesses feel the pressure most sharply.
- Recovery Doubts: One in six believe they’ll never fully recover financially from the pandemic. Consequently, two in five want lasting government support to bounce back.
Small businesses represent 99% of all UK companies and generate trillions of pounds in turnover annually. These firms are the lifeblood of local communities and the core of the national economy. While optimism persists, the need for support is clear. Without steady backing, the rising cost tide could drown even the most resilient ventures.
