Give small firms a lift in the summer, FSB urges, as May’s GDP falls

Press Releases 13 Jul 2023

Despite the tough headwinds, small businesses are still looking to the summer for recovery and growth

Responding to Office for National Statistics figures showing that GDP fell by 0.1% in May 2023 compared with the previous month, and flat in the three months to May, Martin McTague, National Chair of the Federation of Small Businesses (FSB), said: 

“The estimated fall in the headline GDP measure in May is unwelcome, but it is not a surprise.

“Small firms have been telling us they are facing pressure from all directions, such as interest rate rises, cost inflation and an ongoing late payment culture by big corporates.

“The monthly fall in the food and beverage sector and overall consumer-facing services output is concerning, showing frail consumer demand in the face of mounting prices and negative real wage growth. We urge the Bank of England to tread lightly when considering further interest rates rises.

“Ever since the Government downscaled its support on energy bills at the end of March, many thousands of small firms have seen their utility costs going back to the market peak level last summer, up by three- or four-fold from when the more generous support was in place. 

“Despite the tough headwinds, small businesses are still looking to the summer for recovery and growth.  

“The Government should build on this spirit of determination and give small firms a lift. We look forward to the imminent conclusion of its payment and cashflow review and hope to see an ambitious package of measures to clamp down on late payments and get funds flowing through supply chains.

“Cutting their fixed costs – by looking at business rates, increasing the VAT threshold, and ensuring that small businesses trapped on high energy tariffs can ‘blend and extend’ their contracts – would relieve margin pressure, and encourage small firms to fulfil their true potential as the engine of recovery.”