One in five retailers could close as business rates skyrocket
Nearly one in five small businesses have suggested they could close following the upcoming revaluation of business rates, new research has revealed.
The survey of small firms by the Federation of Small Businesses found that more than a third of businesses expect to see their rates rise, while 44% say the additional bills will top £1,000 annually.
Perhaps most concerning though, is that 19% of small businesses say they will consider closing down entirely as higher rates mean their operational costs will be too high.
Around a fifth of firms also expect their business rates to increase by more than 40%, while of all firms expecting a rise, 54% say their profits will be hit.
This will have a knock-on effect on consumers, as 38% of businesses said they would increase prices to cover the losses.
In the long term, the FSB has suggested that productivity and growth will be hit, especially given that 55% of those facing rate increases expect to either reduce, postpone or cancel investment options entirely.
FSB national chairman Mike Cherry has suggested the delayed rates revaluation has left firms facing “unsustainable and unaffordable rises”.
It is also suggested that profitability among the UK’s army of small businesses is already falling while Mr Cherry said operational costs for small firms are now at their highest levels since the start of 2014.
The FSB has warned that London could be particularly adversely affected by the rate increase, with the potential for firms to be forced out of the capital as a result.
With small firms fearing for their financial futures, they need to act quickly to reduce the threat of insolvency, while turnaround management could also help to restore company performance.
Support for small businesses is expected in the Budget, as confirmed by Communities Secretary Sajid Javid in recent weeks, while a £3.6 billion transitional fund to aid businesses that are facing increases has already been set up.
By Phil Smith
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