Business optimism rising as economy opens up

As the UK comes out of Plan B COVID restrictions there are signs of real optimism among business owners, but it comes with calls for the government and financial services sector to offer greater support.

Both the British Retail Consortium (BRC) and the Federation of Small Businesses (FSB) have said there are signs of greater confidence.

BRC CEO Helen Dickenson said figures for the final quarter of 2021 saw the overall GB vacancy rate fall to 14.4%, 0.1 percentage points below the Q3 level. It was 0.7 percentage points higher than in the same point in 2020.

However she said the government has to be delivering a levelling up agenda via the white paper set to be delivered this week, as the move to hybrid working posed a threat to the future of city centres.

“The final quarter of 2021 offered the first glimmers of hope for Britain’s beleaguered shopping destinations, as the number of shuttered shops fell for the first time since the start of 2018,” said Dickinson. “It remains to be seen how Omicron will have impacted the number of store closures but given the third lockdown in England had little impact on the vacancy rate, we are hopeful that the trajectory will remain positive. However, with hybrid working unlikely to disappear any time soon, it will be difficult for vacancy rates to fully recover in our town and city centres.”

She added: “Shuttered shops diminish the vibrancy of local high streets, costing jobs and damaging local communities. Business rates reform remains the most effective way of helping drive much needed investment to left-behind communities all over the UK. If the Government is serious about its levelling up agenda, it must ensure that a cut to the rates burden features at the centre of its forthcoming White Paper.

“In the short-term, the Government can address the regional imbalances in the system by scrapping downwards Transitional Relief, which effectively forced businesses outside London to provide a £600 million subsidy to businesses in the capital between 2017 and 2020.”

The FSB has released the results of its latest member survey which found more than half of small firms intend to grow this year, but skills shortages and costs remain a threat.

The FSB said while most small firms plan to grow over the coming 12 months many are being held back by struggles to recruit, increasing costs and a lack of access to finance.

The organisation’s national chairman Mike Cherry said: “After two years of turmoil, in which firms have once again shown their adaptability and resilience, the small business community stands ready to spur our economic recovery. The majority intend to grow over the coming 12 months, and many are looking to increase headcounts.

“Their optimism is, however, hampered by spiralling inflation, labour shortages and looming tax grabs. Come April, they’ll be faced with a jobs tax hike, an increase in dividend taxation and fresh business rates bills.

“We urgently need the Government to start looking closely at the policies that will empower the small business community to spur our recovery from this recession as it did the last. The growth intentions are there, but we need the right support to turn vision into reality.

“The bounce back loan initiative was a real success, but it can’t be thought of as job done. New enterprises are launched everyday across the UK, never more so than at times like this when the economy is changing apace. Our start-ups need funding to go on and be the employers and innovators of tomorrow.

“After the financial crash we saw banks pull-up the drawbridge for small businesses. With emergency loan initiatives and the New Enterprise Allowance at an end, it’s vital that this trend doesn’t take hold once again.”

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