Our Xero Small Business Insights (XSBI) data reveals trends relating to the recovery of the UK’s small business economy following the impact of COVID-19. The latest data shows that December 2020 saw the largest year-on-year decline in revenues since its lowest drop in May. 

Following some signs of recovery last summer, this has been reversed in recent months.  December saw revenues fall 10.3% year-on-year, the biggest drop in revenues since May (-23%). There was a protracted decline in year-on-year revenue growth since the most recent peak (-0.1% year-on-year) in September. 

Unsurprisingly, the data continues to show the impact of restrictions on trading. Hospitality businesses experienced a 52% decline in year-on-year revenue in December. 

Small retailer revenues were 10% lower than the previous year in December 2019. This reinforces the new Office for National Statistics (ONS) data suggesting that the volume of retail sales climbed just 0.3% in December from the previous month, with 2020 seeing the biggest drop in retail volumes since records began in 1997. 

Jobs on the other hand, have remained stable, buoyed by the furlough scheme which is still in place.

However, jobs remained 3.8% lower in December than pre-crisis levels, showing little recovery since the COVID-19 pandemic first took effect. 

The hardest hit sectors remain those most impacted by closures: arts and recreation (-22.9% compared to pre-crisis) and hospitality (-18.4%). Both of these sectors have recorded ongoing declines in jobs since March as restrictions continue. 

As restrictions continue, XSBI data will continue to prove critical to understanding the impact to small businesses across the UK. 

For more information about Xero’s Roadmap to Recovery manifesto, visit our Behind Small Business Hub

To see more insights about this month’s data, please see our December update, and if you’d like to see comparative insights across Australia, the UK and New Zealand, please see our XSBI website.