Amidst yesterdays morning’s announcement of the UK slipping into recession, small businesses are voicing their concerns and calling for proactive measures in the upcoming Budget to spur growth. The Office for National Statistics (ONS) reported a 0.3% contraction in GDP for the fourth quarter. That followed a decline of 0.1% in the previous three months and means the economy entered a technical recession – defined by falling GDP in two or more consecutive quarters.
In response to this confirmation of recession, key figures in the business and finance sectors spoke to SME Today to offer insights and perspectives on the challenges ahead and the necessary steps to stimulate growth.
Martin McTague, National Chair of the Federation of Small Businesses (FSB), highlights the ongoing challenges
faced by small firms, citing plummeting confidence levels and sectoral disparities exacerbated by issues such as the energy price crisis and subdued consumer demand.
“The news that we’re in a recession will just confirm what many small firms have been saying for some time now – it’s very tough out there,” he commented. “Our research found that confidence among small firms has been in negative territory for seven straight quarters, due to the energy price crisis and the knock-on impact on the cost of doing business.
There are big differences between sectors, with the hospitality sector recording by far the gloomiest confidence score, underlining that economic pain and strain are far from equally spread out.
Small firms are grappling with high interest rates, energy costs much greater than they were a couple of years ago, and weak consumer demand. Two in five small firms said their revenues decreased over the final quarter of last year, with only a third saying they increased, showing that the shine has definitely come off the so-called ‘golden quarter’, to small firms’ detriment.
The Government needs to foster an environment where small firms can grow, to the overall benefit of the economy, and to put this period of stagnation and shrinkage behind us once and for all. We have set out an ambitious but achievable programme for small business growth at the forthcoming Budget.
Uprating the Employment Allowance to keep it in line with recent raises in the National Living Wage, raising the VAT threshold from £85,000 to at least £100,000, bringing back tax-free shopping for overseas visitors, ensuring the future of the Recovery Loan Scheme to get funds to start-up and scale-up businesses, and bringing in a national Business Energy Advice Service to help small firms with eye-watering energy costs would all provide a launchpad for growth.
Small firms have the drive and the potential to get the economy back up and running, and to put this period of economic decline firmly behind us.”
George Lagarias, Chief Economist at Mazars, tempered concerns by noting the technical nature of the recession and pointing to potential mitigating factors such as global economic dynamics and upcoming elections. He 
underscored the importance of policy intervention to steer the economy away from prolonged downturns.
“The UK is now officially in a technical recession. Lower inflation numbers earlier in the week did warn us that this may be the case for an economy that has spent a year teetering around zero-growth. This should come as no surprise given the global growth slowdown and weakness from Europe.
However, I remain optimistic going forward, that the recession may not be a deep or long one. Firstly, the “recession”, is in fact technical, with the economy moving from slightly above-zero growth to slightly below-zero. It may signify a trend or be the result of macroeconomic volatility. Second, economic strength from across the Atlantic and a high deficit are keeping the prospect of a deep recessionary spiral away. Third, industrial production in Europe picked up in December, for the first time in nearly a year.
Fourth, we are in an election year. In the age of monetarism recessions are, ultimately, a choice. If the government steps up spending, or if the -independent- Bank of England cuts interest rates faster than presently expected, then the recession should remain short-lived.”
Mike Randall, CEO at Simply Asset Finance, echoed the sentiment, stressing the imperative of government action 
to combat productivity challenges and bolster business confidence, particularly in light of record-high insolvencies in the previous year.
“If we are to avoid further economic downturn in 2024, ensuring positive growth will first and foremost require tackling productivity challenges head on” he said. “While 83% of SMEs told us that they are positive about the future, 72% also said productivity was the biggest challenge for their business. As key drivers of our economy, it’s vital the government considers financial incentives that encourage business investment, while giving them more certainty about the future.”
Caroline Plumb, CEO of Gravita, urged a strategic approach from business leaders, emphasising resilience and prudent financial planning amidst economic uncertainty. Plumb called upon the 
government to enact policies conducive to business growth and stability in the upcoming Budget, emphasising the significance of sustained support for the business community.
“Given the economic turbulence over the last twelve months, the UK entering a technical recession increasingly appeared to be a probability rather than a possibility. However, rather than reaching for the panic button, I’d encourage Britain’s business leaders to stick to the basics. Having repeatedly displayed their exceptional resilience through Covid and the cost of living crisis, leadership teams should focus their efforts on cash flow and implementing comprehensive financial and tax planning. In less than a month’s time, the Government has a perfect opportunity to demonstrate real support for British businesses at the Budget. Putting monetary policies in place that allow companies to thrive, even in the face of adversity, will be fundamental to growing the economy.”
With the impending Budget on the horizon, these insights serve as a clear call for concerted action and targeted interventions to bolster small businesses, restore confidence, and steer the economy towards a sustainable recovery.