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23 January 2009

Unemployment fears rise in small businesses as the country slides into recession

Reference number: PR/2009/06

FSB News Release

PR/2009/06

Issue date: Friday 23 January 2009

Unemployment fears rise in small businesses as the country slides into recession

The Federation of Small Businesses (FSB) reported a dramatic rise in calls to its legal advice line on redundancies from concerned small businesses, on the same day as the official announcement that the UK is in recession.

The FSB's legal advice line saw an extraordinary 214 per cent increase in calls in the fourth quarter of last year as small businesses cut back on costs and sought advice on employment issues and redundancies.

During the first half of last year the FSB saw a comparatively small 27 per cent increase on 2007. But as the downturn spiralled, small firms'' calls in the latter part of the year rose to a worrying 167 per cent – nearly 8,200 calls.

Despite news headlines focusing on mass redundancies in big firms, small businesses have been hit just as hard. And with the Office of National Statistics confirming the UK is now in recession, the FSB is calling for small and medium sized businesses – which employ over half of the private sector workforce – to be given the support they need to tackle unemployment.

The FSB proposes a Five Point Plan that could not only keep people in jobs but also create over 400,000 new ones. The blueprint includes simplifying legislation; cutting payroll taxes; promoting part-time work; providing more opportunities for small businesses to bid for public contracts; and investing in training apprentices as solutions to rising unemployment.

John Wright, Federation of Small Businesses National Chairman, said:

"Small businesses are being hit just as hard as big businesses in these difficult economic times as these worrying figures show. We cannot afford to lose our vibrant small and medium sized business sector.

"As we officially move into recession we must not forget that small businesses are the engine room of the economy and are actually in a key position to generate new jobs and avoid further redundancies. Small businesses are the sector to help pull us out of the recession and they need all the support they can get to do so. We call on the Government to put in place measures to support small businesses, following the key policies we have identified in our Five Point Plan."

For regional FSB contacts please go to www.fsb.org.uk/regions