Around 630,000 UK small and microbusinesses are at risk of going bust in the face of rocketing costs and pressures on consumers, according to new research.
Data analysis of 2.3 million British microbusinesses – which are typically firms with fewer than 10 employees – highlighted growing pressure among small businesses due to rocketing costs, such as increased energy bills.
The Venture Forward report, produced by GoDaddy, indicated the potential collapse of these companies would constitute a £12 billion blow to the economy.
It comes ahead of a key Spring Budget for the prime minister and Chancellor Jeremy Hunt.
However, the research found fewer than one in five (19%) entrepreneurs said they believe Rishi Sunk "is acting in the best interests of small and microbusinesses".
More than three quarters (77%) of entrepreneurs said they believe the cost-of-living crisis is the greatest challenge they have faced, with many citing the impact of higher energy bills.
When asked how MPs can help microbusinesses, the most common response (42%) was to offer tax incentives. Business owners also called for technical assistance for business development and help with digital strategy.
Chris and Sarah Fryer, from Newcastle, who run vegan pie business Magpye, said: "as a bakery we use a lot of energy, so the rising cost of gas and electricity has dramatically increased our overheads.
"We are concerned about the energy relief scheme coming to an end in April, and would like to see the Government launch targeted help for energy-intensive businesses like ours."
Ahead of the Budget, Morningstar senior market analyst Michael Field expects a bit more "breathing room" in the public finances than had previously been expected.
"After the fiasco that was Liz truss' "mini budget" in the Autumn, which was followed by a complete reversal by Jeremy Hunt, the Spring budget will likely be more subdued," he says.
"Since the Autumn the outlook for the UK economy has improved, with the Bank of England now expecting a more shallow recession than previously, and borrowing levels below where the government had forecasted. This should mean more breathing room for the chancellor and possibly a slight loosening of the purse strings, following the relatively austere November budget."
Focusing on specific sectors, Field says certain parts of the business world will be disappointed by the fiscal event.
"Having presented the government with a list of demands, including support packages for first time buyers, it is likely that homebuilders will once again come away from this budget disappointed," he says.
"The lack of support here will be further justified by the fact that house prices across the UK have fallen further over the last few months, increasing affordability."
Defence stocks could also benefit from a symbolic move by the chancellor, he adds.
"Defence chiefs in the UK have been crying out for an improved budget pot, concerns that have been amplified by the Ukraine war.
"Although an increase is expected in the forthcoming budget, it is likely to be a real-terms adjustment, simply to offset the effects of inflation, as opposed to any material increase.
"That said, with more flexibility than available in November, throwing the defence department a bone here could prove an easy win for the chancellor."
By Henry Saker-Clark, PA Deputy Business Editor, with additional reporting by Ollie Smith
