Xero : 17/12/2020 - Smaller decline in UK small business revenue during second lockdown

MEDIA RELEASE

Smaller decline in UK small business revenue during second lockdown

Xero Small Business Insights also shows that jobs remain stable

London, December 17, 2020​- During November's lockdown, UK small business revenues fell -7.9%year-on-year, representing a weaker decline than during the early stages of the pandemic when revenues declined 23% in May.

Small business revenue fell by less in November than in October, which saw a drop of -9.1%year-on-year, according to the latest data from the Xero Small Business Insights (XSBI) programme in partnership with AlphaBeta (part of Accenture).

This is despite revenues within the UK's small business hospitality sector falling -48%year-on-year last month, close to the lowest levels recorded in May (-59%). Revenues in the arts and recreation sector also fell to -31% lower than a year ago as gyms, theatres and cinemas closed again.

The figures come as the ONS reported that the economy remains -7.9% below pre-pandemic levels, with experts predicting that GDP growth will reverse in November and the final quarter of 2020.

However, the figures from the XSBI programme suggest the impact on small business revenues is less significant than earlier in the year, not just due to the length of restrictions but also due to how businesses have adapted.

A separate​report​from Xero found that increasing online marketing engagement is the top strategy employed by small business owners in order to maintain operations through the pandemic. The report found that small businesses have used cloud technology more proactively this year, with 49 per cent using cloud technology globally.

Furlough extension keeps employment afloat

The data, based on anonymised, aggregated business data of hundreds of thousands of UK small businesses, found that after a small rise in October, small business jobs declined by 0.5% in November, dropping to 4.2% lower than they were prior to the pandemic.

Retail trade, manufacturing, construction and professional services all saw increases in small business employment in November. Arts and recreation however saw a -4.8% monthly decline and hospitality jobs fell -2.3% in the month.

These declines mean hospitality small business jobs in November were -20% lower compared to pre-crisis levels and arts and recreation were down by -17% over the same period.

While average payment times increased slightly between October and November, these payment times are now at pre crisis levels, with small businesses taking 31.1 days to be paid.

Gary Turner, managing director and co-founder of Xero, said: "We are through the second lockdown and it's a relief to see that businesses haven't been as impacted as they were back in May. But, with Brexit uncertainties and continued restrictions, we aren't through the worst of it unfortunately. These resilient firms need our help more than ever before. The future of the UK's recovery depends on it."

The Office for Budgetary Responsibility (OBR) anticipates that a no-deal Brexit will see the UK economy unable to recover until 2024.

Xero has identified the key areas of Government support needed by small businesses in order to rebuild.

The Roadmap​to Recovery​policy recommendations, covering technology access, digital skills development and strengthened local communities. The manifesto is part of Xero's campaign to support small business recovery.

ENDS

Media contact Clemmy [e-mail][phone]

About Xero

Xero is a cloud-based accounting software platform for small businesses with 2.45 million subscribers globally. Through Xero, small business owners and their advisors have access to real-time financial data any time, anywhere and on any device. Xero offers an ecosystem of over 800 third-party apps and 200 plus connections to banks and other financial partners. In 2020, Xero was included in the Bloomberg Gender-EqualityIndex and recognised byIDC​MarketScape​as a leader in its worldwide SaaS and cloud-enabled small business finance and accounting applications vendor assessment.

About Xero Small Business Insights

The Xero Small Business Insights (XSBI) program provides analysis on the sector's health, with its metrics based on anonymised, aggregated data drawn from hundreds of thousands of Xero subscribers. The result is a picture of business conditions that's more accurate than most private surveys, which typically have a far smaller sample size, and more frequently updated than much of the data on small business. Xero is currently producing a series of specialised monthly metrics, providing a view of the impact of COVID-19.

About AlphaBeta Australia (part of Accenture)

AlphaBeta Australia (part of Accenture) is a research firm with offices in Sydney, Canberra and Melbourne. It specialises in combining advanced analytical techniques and innovative data to generate new insights and fresh perspectives on the challenges facing business and government.