As far as business is concerned, it seems, inflation is more toxic than the coronavirus.
A survey of 139 small and medium sized enterprises (SMEs) in the construction sector found that, without government support that got them through the pandemic, most are now fighting for their lives.
The survey, by money lender Bibby Financial Services (BFS), found that 82% consider the current economic landscape worse than the pandemic and just 11% are prepared to deal with any more cost rises – 55% said they would prefer two more lockdowns to any further rise in inflation.
Derek Ryan, UK managing director of Bibby Financial Services, said: “Two years ago, we thought the Covid-19 pandemic and successive lockdowns were the greatest issue to hit businesses in a generation. However, SMEs are now telling us that the current economic climate is unsustainable. In the face of a near certain economic recession and spiralling costs, it’s life or death for many of the UK’s construction SMEs.”
He continued: “SMEs in the construction sector demonstrated stoic resilience during the pandemic, in large part thanks to the government’s intervention, and the provision of loans, grants and furlough payments. But now they are on the brink of an even greater crisis without a lifeline.
“While the new government’s announcement that it is committed to supporting SMEs overcome these challenges is a positive sign, right now, all small construction firms have is a placeholder. It remains to be seen whether the detail of the government’s package will be sufficient. If it isn’t, many viable businesses will be lost. And, if we don’t protect these businesses now, the UK’s economy could take many years to recover.”
The survey also asked what type of assistance construction SMEs feel would be most effective. Providing an extension to the VAT cut is a favourite choice, selected by 43% of respondents. This is closely followed by increasing tax relief options (40%) and providing affordable financial support (37%). In addition, 25% of construction firms surveyed would like to see an increase in the allowance for energy grants.
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