The FPC said: “Significantly more [small companies] now have debt to service, and while the majority of new debt was relatively cheap due to government loan schemes, this will add to pressure on weaker [businesses].”
It comes amid signs of increasing pessimism over the British economy.
Bank of America’s gauge of UK consumer confidence has continued to slip in the past two weeks, falling to its lowest level since April in a move analysts said was driven by tax hikes, [the] energy crisis, Covid cases, shortages and inflation.
The figures come ahead of new GDP data next week, which economists believe are likely to show that August was a last hurrah for post-lockdown growth before inflation and economic disorder began to bite.
Sanjay Raja from Deutsche Bank predicted monthly growth of 0.3pc, an acceleration from a narrow gain in July.
He said: “We don’t think that the pick up in growth will last very long, however – at least not while supply side constraints continue to hamper demand.
“With supply frictions rising, inflation biting, and confidence falling, we expect the rest of the year to see a more notable slowdown in activity.”
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