A survey showed that three-quarters of small and medium-sized businesses are concerned about the long-term impact of the cost-of-living crisis, rising energy bills and rising inflation on their businesses.
Just over half of SMEs (51%) expressed concern that higher prices would hurt consumer spending in response to the Barclays SME Barometer, a quarterly survey on business sentiment conducted for the bank.
High energy bills and rising raw material costs are putting pressure on companies and creating a difficult business environment.
More than a quarter of the 574 companies surveyed fear that they will become uncompetitive if they are forced to raise their prices in response.
They report that a tight job market is putting more pressure on companies, and some are struggling to hire new employees. Recently, companies across a range of industries, from nurseries to nightclubs, have reported problems finding workers for key positions.
However, the four-day banking weekend marking the platinum queen’s anniversary was a rare bright spot for small and medium businesses, which said they believed sales would pick up during the break.
The bank holiday at the end of May has been pushed back to June 2, giving a longer break until June 5, as part of an eventful year marking the first time a British monarch has acceded to the throne in seven decades.
Independent pubs, bars and restaurants are anticipating a sales increase of around £76m over the anniversaries on Thursday and Friday.
The companies that participated in the Barclaycard survey predicted that the festivities would boost their revenues. Six out of ten small and medium-sized businesses said they expect an average increase in sales of 10% between April and June compared to the same quarter last year.
Hospitality and leisure companies also expect revenue during the three-month period to be a third (35%) higher than in 2021, when they reopened when Covid lockdown restrictions were eased.
While some SMEs were positive about their own prospects, nearly half said they were pessimistic about the outlook for the broader UK economy, while two-fifths reported that the current business environment is unstable.
Sentiment about the business outlook and its stability waned since the first quarter and was well below levels seen in early 2021, despite the many coronavirus restrictions that were still in place during that period.
Business concerns about the future economic environment follow the successful first quarter of the year, when more than half reported increased sales compared to the last three months of 2021.
These numbers are buoyed by the volume of debit and credit payments processed for SMEs, which, according to figures from Barclaycard Payments, saw a 20% increase in value and a 35% increase in volume between January and March compared to pre-pandemic levels. The significant growth in spending among SMEs is partly due to the rapid shift from cash to card payments during the pandemic.
“After an exceptionally challenging time for the hospitality and leisure sector, it is encouraging to see that companies have reported an increase in revenue over the past few months despite the challenging economic climate,” said Colin O’Flaherty, Head of Small and Medium Business at Barclaycard Payments.
Ross Robinson, owner of The Queens Pub and Hotel in Lytham, which will be holding an anniversary event, said the extra bank holiday should allow the company to take advantage of warmer weather and people’s willingness to go outside.
“We hope the public will use this time to support businesses in their area and increase sales at a time when the total cost of running a business is at its highest in many years,” he said.