By Max Clarke

With unprecedented bad weather costing the economy between £600 million and £1 billion every day, the Federation of Small Businesses (FSB) is calling on the Government and the banks to provide hard hit small businesses with the breathing space they need to stay afloat over Christmas and the New Year.

After a year which has seen the confidence levels of small businesses, particularly high street retailers, plummet and with the forthcoming VAT rise meaning a bleak New Year, many small businesses may struggle to survive in the early part of 2011.

Even before the weather struck, businesses dependent on discretionary spending were predicting job losses and a difficult year ahead — almost 40 per cent of retailers thought that their business prospects in quarter four would be worse than in quarter three, and the recent cold snap will only serve to compound this.

With more bad weather still to come, the FSB is calling on the Government, banks, local authorities and landlords to give struggling small firms some leeway and recommends that:

· HMRC extends its Time to Pay scheme to allow small businesses time to recoup lost takings in order to have the cash-flow to be able to pay

· Landlords, especially where the landlord is the local council, should push back rent reviews due in the New Year

· Local Councils should use their powers to grant hardship relief and temporarily reduce business rate bills for those businesses in financial difficulty

· Banks, utilities and insurers should give small businesses some breathing space

John Walker, National Chairman, Federation of Small Businesses, said:

“Small businesses were banking on a good Christmas to make up for a bad year and the prospect of more bad news in 2011. Many shops and restaurants have taken on additional seasonal staff to cope with the anticipated demand of the Christmas season, but last weekend saw a drop in footfall of up to 30 per cent, leaving businesses with increased overheads and falling trade.

“The last thing this Government needs is a wave of bankruptcies and shop closures in 2011, but small firms will find it very difficult to bounce back in the New Year when VAT increases to 20 per cent and the spending cuts start to bite.

“We need to see a co-ordinated effort from Government, banks, local authorities and landlords to give small businesses some breathing space to recover in the New Year.”