Mersey Reporter - #Merseybites #News

THE National Living Wage, already 1 of the highest in the world, is set to rise again in April 2026. Many businesses are already struggling to pay the current wage bill, and increasing it to £13.46 could be the last straw for many small businesses. On paper, it sounds good. Higher pay means more money in the economy and more cash for employees, until they realise many small businesses already face closure. This will result in a massive wave of job cuts and bankruptcy proceedings, which would hit the national economy even harder.

Already, due to Brexit and issues with trade with the US, many small businesses face difficulties selling their products abroad. This generally means the United Kingdom imports more than it exports, resulting in a trade deficit. This in turn means we are bleeding money out of the country, and less money is being generated by businesses to boost the economy. In 2024, UK exports of goods and services were around £873 billion, while imports were reported to be £906 billion. It might not appear to be an issue, but in reality, it is. We must lower our costs to be competitive in the world market. Higher wages are just a cosmetic measure that makes people think they are getting a better deal, but they are only making things worse. This is why the Minimum Wage Committee has been reported to be refusing to back the hike over fears about the impact on businesses.

Combining this with the fact that many small businesses are still paying back COVID-19 loans and many business owners never received personal financial help during the lockdowns is an additional issue. This budget already has huge implications even before it is published, with many small businesses considering whether they can continue to trade. A November 2025 survey by the Federation of Small Businesses (FSB) found that nearly 1 in 3 small firms expect to shrink, sell up, or close down in the next 12 months. Overall, small businesses have already decreased by nearly 300,000 between:- 2020 and 2025, largely driven by the fallout from the COVID-19 pandemic and Brexit. This means business closures have outpaced openings for the 1st time since 2010, indicating a challenging environment for survival and growth.

Banks are not helping businesses grow, and government financial support is lacking, with most of it going to large international firms. We need small businesses more than ever to stabilise our economy and stop the wealth of our nation from being ripped away into the pockets of international business. Most of the public does not realise that small businesses employ around 60% of the private sector workforce.

The rate of closure might not be headline-grabbing as it is a slow death, unlike the loss of high-profile big businesses. When big businesses go under, papers and media publish it and create big news items, yet the loss of a small business employing:- 3 or 4 people will not hit the headlines. Small businesses with fewer than 50 employees dominate the UK economy, yet when they close, many of us do not think about it, believing:- "It is not a big issue... It's just a few jobs lost!" Yet, as the old adverts said:- "every penny counts," or in this case, every job counts. The successive job losses have a far bigger impact in the long run than the jobs lost to big businesses, and the loss of those small businesses truly risks the nation's economic prosperity. The loss of innovation led by small businesses also means that we are in a situation where we are losing our nation's ability to grow in the future.

Passing on the debt to small businesses is not the way forward. It is the way to destroy our local and domestic economy. We do need to address the cost-of-living crisis, but not at the cost of destroying our long-term future and our small businesses. Beyond the direct financial toll, the UK is losing vital cultural institutions and grassroots venues. As a nation, it is even more vital to help establish small businesses and help them to keep our local economies afloat.

Already in Southport, we can see small businesses closing, with many blaming everything but the stark reality that small businesses are the true backbone of our country. The widespread closure of UK small businesses is viewed by many experts as a significant threat to the nation's economic future, with some warning it could create a:- "vicious cycle" of lower tax income and higher unemployment. In short, a high rate of closures directly leads to increased unemployment, which in turn reduces consumer spending. This will further exacerbate the closure of small and medium-sized enterprises (SMEs), which are the backbone of the UK economy, and the black hole in our national economy grows.

The Federation of Small Businesses have already found 55% of North West small businesses saw revenues decrease over the past quarter, which is double the number of those reporting revenue growth (21%). They also reported that they have found out 16% of businesses in the North West expect revenues to increase in the coming 3 months, whilst significantly more (52%) believe they will fall.

Already, the fall in revenue is not only affecting established businesses but also it us now have lasting implications for local economies and new start-ups seeking financial help to turn an idea into reality.

Running a small business is inherently risky, and threats to business survival are common and varied. With Universal Credit now being cut for freelance and small business owners, the lifeline offered to them in the past has been removed. This adds the question to many looking at setting up:- "Can I afford the risk?" This and the push for an immediate profit are why many small businesses are no longer going for innovation and developing new markets. Some technology sectors take years, if not decades, to turn an idea into profit. A prominent example of a well-known technology firm that took years to become profitable is Amazon.com, which took over 9 years to achieve its 1st annual profit. In this climate, would you take a risk? We must remember that without small businesses, economic growth is a lost cause.

The current way of old-school politics and economics creates a domino effect where both new and remaining businesses also struggle to remain sustainable. The loss of them creates a downward pattern that affects more and more local communities and high streets. These closures have a profound impact on local communities, leading to empty storefronts, reduced foot traffic, and a decline in the overall appeal of towns and local areas, not forgetting the loss of jobs. We just hope that all small businesses get funding support in the next budget, but in reality, we do not see this happening.

Phil McCabe, FSB Regional Business and Stakeholder Engagement Manager, said:- "Small businesses are struggling everywhere and FSB's Small Business Index shows that North West confidence is at rock bottom compared to the rest of the UK. More firms believe they will shrink, sell up or even close down in the next 12 months and fewer in the Region anticipate growth. Revenues have plummeted and anticipated revenue performance looks bleak. These figures are horrifying and they are a stark wake-up call for the Government. FSB is calling on Chancellor Rachel Reeves to take bold action in the Budget to support entrepreneurship and ease the mounting tax and employment cost burdens on small firms. We must turn this around and enable small businesses to grow rather than having their ambitions held back, and in turn hampering economic growth. A situation of vast numbers of small businesses shrinking, closing or selling up rather than growing means a vicious cycle of a lower tax take, higher unemployment, and greater demands on the state, all exacerbating each other in a downward spiral. The Government must also follow through on its pledge to tackle late payment. Local authorities can play their part by supporting more small businesses to access public procurement opportunities and ensuring prompt payment along the supply chain by making it a qualifying factor in winning contracts as a major step in delivering both economic growth and social value. In addition, in light of the new national Business Growth Service; delivered locally by the Growth Hubs; local authorities must now oversee the creation of effective business support, guidance and advice services. The upcoming Budget will be a make-or-break moment. The stakes couldn’t be higher. Economic growth cannot happen without small businesses; it's time for the Government to do right by them."

Is the UK going to be like the Roman Empire, with civil unrest, with both political and financial collapse, before becoming a footnote in history books? How do we help save small businesses when the public and politicians do not see this hidden crisis that is threatening our very economic future for generations to come?

If you think this is not a local issue, think again...