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Soaring energy costs are wider inflation are pushing consumer SMEs such as cafés, restaurants and shops to the brink of collapse, the Federation of Small Businesses has warned.

FSB director Martin McTague told The Independent that rising energy bills, coupled with reduced consumer spending, is forcing thousands of small businesses into making “impossible choices”.

“How is an independent cafe supposed to find another £20,000 a year to keep the lights on and the coffee machine going, when they are barely breaking even as it is?

“How can a small manufacturer find another £70,000 to keep the production line going and the staff room heated? With five-figure annual energy cost increases common, too many small firms are being faced with impossible choices.”

The comments came as the latest quarterly Federation of Small Business (Small Business Index (SBI) found the majority of small firms expect no or negative growth in the next year.

The combined proportion of small firms who predict that they will stay the same size (38.7%) or downsize or even close their business (14.7%), at 53.4%, outweighs the 46.6% who predict they will grow in the coming 12 months.

Small firms’ anaemic growth predictions coincided with the highest-recorded proportion of firms saying their costs are higher than a year ago, at 89.0%, and with the highest level of producer price inflation for four decades in June.

Fuel (cited by 64.2%) and utilities (63.5%) were the most-mentioned causes of this increase in costs, both up notably from the first quarter (60.1% and 58.0% respectively), and far higher than this time last year (Q2 2021: fuel cited as a cost increase factor by 25.9%, and utilities by 27.6%).

Of those businesses which expect to grow in the coming year, two thirds (65.1%) cite the domestic Economy as a potential barrier to expansion, a figure which has risen from 58.6% in the Q1 report.

Lack of access to appropriately skilled staff was also noted as a significant worry, mentioned by 33.9% of businesses which expect to grow as a limiting factor.

With ONS statistics showing there were 1.3 million vacancies in Q2, many firms are not able to find the staff they need, putting normal operations and usual opening hours – let alone plans to grow – in question.

Yet Q2 2022 also saw more small businesses reporting a fall in employee numbers than growing their payrolls, the first time this has happened since Q1 2021.

One in ten small businesses (10.8%) grew their number of employees over the previous quarter, but were outnumbered by the one in seven (14.4%) who saw staff numbers fall over the same period.

“If the next Government wants to be able to level up the country, small business considerations must be at the heart of its thinking. Our members are looking for concrete help.”

“Extending energy support issued via the council tax system to the rates system, direct help with bills for those small firms which don’t pay business rates, and cutting VAT on energy consumption will make a real difference in this space.”

Morning update

English sparkling wine producer Gusbourne has appointed Katharine Berry as Chief Financial Officer

She has been the finance director at global drinks group Atom Supplies for the past five years and prior to that was the head of property finance at Eight Roads Services (UK). She has also worked at Fidelity, Close Brothers and Mercer.

Her appointment with take effect from 19 September and she is expected to be appointed to the board in due course.

Charlie Holland, Gusbourne’s CEO and Chief Winemaker commented: “On behalf of the Company I am delighted to welcome Katharine to the Gusbourne team. Katharine is an outstanding individual and brings a wealth of knowledge and commercial experience to the business.

“I have no doubt Katharine will make a valuable and lasting impact and look forward to working with her and the rest of the executive team as we continue to deliver Gusbourne’s exciting growth strategy.”

The latest weekly Retail Traffic Index from Ipsos for the week Monday 15 to Sunday 21 August shows retail footfall across the UK fell by 6.8% compared to 2019 in the non-fodd sector.

Figures were up 9% year-on-year, but remain down on pre-Covid levels.

High Street traffic was down 6.5%, retail parks 4.9% and shoppings centres 7.4%.

Cities were down 8.7%, but towns were up 2.2% on pre-Covid levels.

On the markets this morning, the FTSE 100 has opened the week down 0.5% to 7,512pts.

Risers include Devro, up 2.6% to 205.3p, C&C Group, up 2.5% to 191.2p and Reckitt Benckiser, up 0.5% to 6,708p.

Fallers so far include Deliveroo, down 4.1% to 85.4p, McBride, down 4.1% to 21.1p and Just Eat Takeaway.com, down 3.7% to 1,716p.

This week in the City

It looks a quiet week in store as we run up to the August Bank Holiday.

Tomorrow brings the monthly Nielsen grocery sales figures.

In the US, Hain Celestial posts its full year earnings on Thursday along with Coty. Also on Thursday, German food delivery firm Delivery Hero posts its interim results.

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