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 June 2020 they showed signs of recovery.
There were tentative improvements in revenue with small business revenue increasing by 11% in June. Although revenue was still down on last year, it improved from 29% down in May (YoY) to 18% down in June (YoY). The data shows the sectors of construction (12% down in the year to June, compared with 41% down in May) and manufacturing (3% down in June, compared with 24% in the year to May) seeing the most revenue improvement in June. The hospitality (51% down in the year to June, compared with 63% in May), arts and recreation (37% down in June, compared with 48% in May) sectors experienced the lowest revenue improvement.
The length of time it took for small businesses to receive payments on invoices has shown tentative signs of improvement, decreasing by 1.1 days between May and June but remaining 5.7 days longer than pre-crisis levels.
Despite signs of recovery being seen in revenue figures, job losses have continued. Employment dropped another 4% in June, marking an overall decline of 8% since March 2020. Most UK regions shed jobs, with the East Midlands (-7.7% m/m) and the North West (-6%) experiencing the biggest drops in employment between March and June.
Jobs declined further across nearly all industries in June too, except information media and telecommunications which saw a small increase of 0.5% between May and June.
Gary Turner, UK managing director of Xero, commented: “This data suggests initial signs that the UK’s small business economy is starting to recover from the crisis. However, small businesses are yet to show signs of re-hiring in June, with many still subject to restricted trading conditions. We’re hoping the continued relaxation of restrictions in July will be reflected in improved hiring and revenue figures as small business confidence rebuilds.
“Despite some cautious signs of recovery, small businesses will need more guidance than ever as government support like the furlough scheme and bounce-back loans start to wind down. We’ll be working with our small business customers to help them navigate this next phase - ensuring they get the support they need both from their accountants and the government. ”
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.
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.