Our Xero Small Business Insights (XSBI) reveal trends relating to the recovery of the UK’s small business economy following the impact of COVID-19. In August, there were some positive signs as sales and jobs stopped declining - but levels still remain below pre-crisis levels.
Based on anonymised and aggregated data from hundreds of thousands of subscribers, the latest data shows that UK small business job losses began to stabilise in August. They were down just 0.1% (compared to July) after consistently falling since March. Jobs are now 6.7% lower than they were in March.
Small business revenues were 12.6% lower than a year ago, but have been broadly stable for the last three months. Despite positive signs of revenue and jobs stabalising, new restrictions introduced in September and changes to the Government’s job retention scheme are likely to impact small businesses in the coming months.
All industries recorded revenue lower than a year ago, but the hospitality and arts & recreation sectors continue to be the worst hit by the pandemic - both down 37% y/y. Hospitality also continues to be the sector with the largest small business job losses, down 17.3% y/y.
Looking at the regional picture for August, the biggest job declines, from pre-crisis levels, are in the West Midlands (-9.0%), North West (-7.3%), East Midlands (-7.2%) and Yorkshire and the Humber (-6.2%). All of these areas have had local lockdowns of varying degrees and length in recent months.
Meanwhile, areas that avoided local lockdowns, such as London (-3.7%), East England (-2.1%) and Wales (-1.8%), have been more successful at rebuilding small business jobs.
Gary Turner, managing director of Xero, commented: “The post-lockdown economic recovery is at a crossroads now as the eating out schemes come to an end and new national restrictions are put in place. As unpredictable as this year has been, one certainty is that digitally-enabled businesses are likely to recover faster than those who aren’t.
“We’re calling on the Government to support business recovery with funding for tech adoption and the introduction of a tax offset for expenses against technology implementation. Driving digitisation will help countless small businesses to get back on their feet.”
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, and improved regional internet access.
For more information about Xero’s Roadmap to Recovery manifesto, visit www.xero.com/behindsmallbusiness.
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.