Last week’s GDP figures from the Office for National Statistics confirmed growth of just 0.2% in the second quarter of this year.
Various one-off factors have been blamed for the sluggish growth, such as the royal wedding, April’s warm weather and the Japanese tsunami.
George Osborne, the Chancellor of the Exchequer, said it was positive news that the British economy is still growing and jobs are being created. The UK is also seeing an increase in the number of start-ups, which should benefit umbrella company contractors. 396,000 new firms started up in 2010/11, up from 362,000 the previous year.
Kevin Walmsley from Wilkins Kennedy said that recessions present opportunities and the increase in start-ups shows that there are still entrepreneurs who are confident that they have a strong business model.
However, small businesses are being crippled by rising costs and more than 50% of them think their business will fail if the situation continues. Over the past five years, overheads have increased by 22.8%.
A survey by the CEBR and Make it Cheaper has discovered that rising costs are the most significant threat to 78% of small businesses. In fact 89% said the UK is an unbearably expensive country in which to conduct business.
67% of small firms said their profit margins have been eroded by increasing costs, 46% have had to increase their prices and 22% have reduced their headcount. 74% of the UK’s small firms think that rising costs have damaged their ability to grow and 86% say this is damaging the economic recovery.
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