Our Small Business Insights (SBI) reveal trends relating to the recovery of the UK’s small business economy following the impact of COVID-19, and for July 2020 they showed continued job losses despite a slight sales recovery.

Based on anonymised and aggregated data from hundreds of thousands of subscribers, the latest data shows that UK small business jobs fell a further 2% in July (after a 1% fall in June), as the Government began phasing out the furlough scheme. 

Despite further job losses, revenue across the small business sector showed continued signs of improvement from its worst month in May where it was 27 per cent lower than a year earlier. In July it improved to 13 per cent lower than one year ago.

Looking at the industry comparisons, the manufacturing sector is leading the economic recovery in July, with revenue now 1 per cent higher than it was in July 2019. Construction has followed a similar pattern, with revenues recovering to 5 per cent lower than July 2019. However, employment remains below pre-crisis levels in both industries, with information media and telecommunications the only sector to experience an increase in employment compared to July 2019 (+3.6 per cent).

Small businesses across all UK regions reported lower employment figures than in March. The regions most impacted in July were the West Midlands (-10.4 per cent), East Midlands, (-8.8 per cent) and North West (-8.2 per cent), influenced by the local lockdowns taking place in Leicester and Preston around this time.

Gary Turner, managing director of Xero, commented: “Our data is showing some semblance of a bounce back compared to when we first went into lockdown. But it’s concerning to see that employment amongst small businesses is still falling. It would be tragic if the furlough scheme has just delayed the impact, rather than acted as a bridge to recovery. 

“Over half of our GDP comes from small businesses. They’ve shown huge resilience in recent months, so it would be hugely damaging to our economy if they don’t get the continued support they need as they recover.” 

Xero has identified the key areas of Government support needed by small businesses in order to rebuild. The Roadmap to Recovery policy recommendations, covering technology access, digital skills development and strengthened local communities, include calls for 30 days payment terms as standard, digital tools tax relief, improved regional internet access and an offset of technology expenses against tax. 

The manifesto is part of Xero’s campaign to support small business recovery, and calls for the UK Government to meet the ‘levelling up’ agenda as part of its election promise. 

For more information about Xero’s Roadmap to Recovery manifesto, visit www.xero.com/behindsmallbusiness

To see more of the comparative insights across Australia, the UK and New Zealand please visit.

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About Xero Small Business Insights

The Xero Small Business Insights program provides analysis of the sector’s health, with metrics based on anonymised, aggregated data drawn from hundreds of thousands of subscribers. The result is a picture of business conditions that’s more accurate than most private surveys, which have a far smaller sample size, and more frequently updated than other UK data on small business. Xero is currently producing a series of specialised monthly metrics which analyse the impact of COVID-19 on the small business sector.