The Government is being urged to tackle an “unprecedented” slump in confidence among small businesses amid warnings that thousands are struggling to stay afloat.

The Federation of Small Businesses (FSB) said Chancellor Sajid Javid should bring forward “radical interventions” in next month’s Budget to address slowing economic growth.

The group called for a major reduction in business rates bills for small firms, saying thousands were being hit by “spiralling” operating costs.

The FSB recommended that the Retail Discount – which allows small retailers with rateable values of up to £51,000 to claim a 33% discount on their rates bills – be increased to at least 50%, made permanent and extended to small firms operating in other sectors, including manufacturing.

It is also calling for the threshold for Small Business Rates Relief to be increased from £12,000 to at least £30,000.

FSB chairman Mike Cherry said: “Small businesses have been left hamstrung by uncertainty for the past three years. We need to see the Chancellor step up to the mark next month with measures that will reinject optimism into the small business community and enable growth. Otherwise, we’re in for a very bleak winter.

“Business rates reform must be a priority. This unfair, regressive tax – which hits firms before they’ve made their first pound in turnover, let alone profit – continues to threaten the futures of small firms all over the country.”

Alan Jones is PA Industrial Correspondent.