UK small businesses employment creeps back towards normality

Lucy Harley-McKeown
·2-min read
Workers sew shoes at the Tricker's shoe factory in Northampton, central England. Photo: Darren Staples/Reuters
Workers sew shoes at the Tricker's shoe factory in Northampton, central England. Photo: Darren Staples/Reuters

Green shoots are appearing for the UK's small businesses after a tough year, as jobs stabilise and revenues start to pick up.

According to data from small business platform Xero, small business jobs have increased slightly for a fifth consecutive month in the UK, with year-on-year revenues also improving compared to January.

Xero's Small Business Index (XSBI) found in the data for February that employment across small businesses is continuing to show signs of recovery with a 0.6% increase from last month.

Jobs, however, still remain 2.2% below pre-coronavirus levels so there is still some work to do as the UK looks to opening up its economy.

The XSBI programme is produced in partnership with Accenture and is based on analysis of the records of hundreds of thousands of small businesses (anonymised and aggregated for privacy).

Xero also found that small business revenues are also showing gradual signs of improvement — the protracted downturn in revenue continued in February, down 3.2% compared to February 2020, but this is an improvement after falling 7.7% year-on-year in January.

When analysing the data by sector, the arts & recreation and hospitality industries were down by a fifth (-20.7% and -19.1% respectively) compared to March 2020.

Watch: What UK government COVID-19 support is available?

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Industries less impacted by restrictions have continued to see improvements: jobs in information media & telecommunications grew 10.2% on pre-crisis levels, while professional services went up 5.5%, Xero said.

Scotland, London and Wales had the largest declines in revenue across the UK, while Northern Ireland, the South West and East Midlands saw revenues increase in February.

When looking at average payment times to SMEs, invoices took 1.3 days longer to be paid in February than in January, bringing the average payment time to 31.3 days. Despite the monthly increase this is still six days less than at peak levels of April 2020.

A rocky road. Chart: Xero
A rocky road. Chart: Xero

Gary Turner, Xero co-founder, said: “There are positive indicators and if sustained over the next period, point to the prospect of the economic recovery having begun, albeit slowly.

“We’re continuing to call on and work with the government to ensure small businesses have access to the right support to bounce back strongly.

Watch: What is a V-shaped economic recovery?