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Small businesses are expecting to axe more staff this year, warns the Federation of Small Businesses (FSB).
Small businesses are expecting to shed more staff this year, warns the Federation of Small Businesses (FSB).
A new report which looks at the general health of the small business sector has found 12% of firms expect to decrease their number of staff, and claims firms ended 2010 less confident than they had been at the beginning of the year.
The latest Voice of Small Business index shows the private sector recovery lost momentum in 2010.
As the constraints on business cash flow increased from utility bills, fuel duty and VAT combined with the public sector cuts, growth in 2011 is likely to be sluggish at best, says the report.
The severe weather at the end of the year and the rise in VAT to 20% have both had an impact on small firms’ confidence, claims the report, especially in businesses operating in service and consumer focussed sectors.
John Walker, national chairman of FSB, said: ”A number of pressures on small businesses are beginning to come to a head, such as the increase in VAT and fuel duty, placing more strain on cash flow.
”This combined with the severe weather at the end of 2010 has meant that small firms are not as confident about their prospects in 2011.
”With inflation above target and the labour market still weak, small firms cannot rely solely on the consumer for growth in 2011. So it is imperative that the Bank of England base rate is kept at 0.5%, as once the impact of the VAT rise is excluded, inflation is relatively low.”
The FSB has urged the Government to bring forward plans for growth that include a competitive tax system to to help boost employment and a fuel duty stabiliser.