UK News Record 250,000 small businesses could go bust in the next 12 months

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At least 250,00 small businesses across the UK are set to fold unless they are given more help to fight through the pandemic, industry leaders have warned.

A record number of companies have said they are planning to shut up shop over the next 12 months, according to a survey from the Federation of Small Businesses (FSB), as they feel unable to carry on.

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This number, the highest since the FSB began collecting data in the aftermath of the financial crisis, does not include thousands more of the UK's 5.9 million small firms which are struggling but hope to continue trading.

Mike Cherry, national chairman of the FSB, said: 'The development of business support measures has not kept pace with intensifying restrictions.

'As a result, we risk losing hundreds of thousands of great, ultimately viable small businesses this year, at huge cost to local communities and individual livelihoods.'

The pressure being piled on by the pandemic poses a risk for the 16.8 million people who work in small companies across the UK.

© Provided by Daily Mail Mike Cherry, national chairman of the Federation of Small Businesses, said the development of business support measures 'has not kept pace with intensifying restrictions'

In the three months to December, one in five firms surveyed by the FSB had axed staff, and one in seven expect to do so over the first three months of this year.

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The worrying number of redundancies comes as the latest lockdown is expected to put millions more employees back on furlough, with the taxpayer covering the lion's share of their wages.

The scheme has already cost the Treasury more than £46 billion, and is still spiralling higher.

The Institute for Employment Studies (IES) thinks school closures could ramp up the number of people using the furlough scheme to between 5 million and 6 million - even more than during the second lockdown in November.

© Getty Images Rishi Sunak

This is up from an estimated 3 million at the end of December, and would hit levels last seen in July at the end of the first lockdown.

John Philpott, a labour market economist, told the Sunday Telegraph: 'The prospect of a vaccine route out of lockdown later this year will give a boost to furloughing by offering firms an opportunity to hold fire on longer-term staffing decisions until the actual business outlook becomes clearer.'

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It is a new blow for the UK high street in 2021, with the sector still on its knees after the horror show that was 2020. Only shops which sell or provide vital services can open.Boris Johnson told Britons that they would only be allowed to leave the house for permitted reasons - including 'to shop for essentials'.

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But Mr Cherry said small businesses needed more support than just furlough. 'At the outset of the first national lockdown, the UK Government was bold,' he said.

'The support mechanisms put in place weren't perfect, but they were an exceptionally good starting point. That's why it's so disappointing that it's met this latest lockdown with a whimper.'

© Provided by Daily Mail An empty high street in Shrewsbury last Thursday during England's third national lockdown

While he welcomed the grants of up to £9,000 for retail, leisure and hospitality businesses, Mr Cherry said the Government 'needs to realise that the small business community is much bigger than these three sectors'.

He added: 'Company directors, the newly self-employed, those in supply chains, and those without commercial premises are still being left out in the cold.'

He advocated loosening repayment terms on emergency loans, so firms can focus on surviving without being bogged down by debt, and giving funding to exporting businesses so they can take advice on how to trade with the EU under new Brexit rules.

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A Business Department spokesman said: 'We understand these are extremely challenging circumstances for businesses, which is why we have put in place one of the most comprehensive and generous packages of business support in the world worth £280 billion.

Gallery: Companies that are helping fight coronavirus (Photo Services)

'This includes a new one-off grant worth up to £9,000, VAT relief, various loan schemes, a business rates holiday as well as the extended furlough scheme.'

Stay alert to stop coronavirus spreading - here is the latest government guidance. If you think you have the virus, don't go to the GP or hospital, stay indoors and get advice online. Only call NHS 111 if you cannot cope with your symptoms at home; your condition gets worse; or your symptoms do not get better after seven days. In parts of Wales where 111 isn't available, call NHS Direct on 0845 46 47. In Scotland anyone with symptoms is advised to self-isolate for seven days. In Northern Ireland, call your GP.