The country fell into the largest recession on record after Office of National Statistics figures showed the pandemic sent the economy plunging by 20.4 per cent between April and June.
The record-breaking fall in the second quarter, which follows a 2.2 per cent fall in the previous three months.
Responding to the news Federation of Small Businesses National Chairman Mike Cherry said: “Small firms make-up 99 per cent of our business community and we won’t recover from this incredibly sharp recession unless they’re firing on all cylinders.
"Every policy change from here on in needs to be carefully assessed for its potential to create jobs, spur growth and increase productivity.
“We need the most pro-business, pro-self-employed Budget ever this autumn, one that lowers the costs of innovating and bringing great goods and services to market and eschews tax rises.”
He called for a cut to employer national insurance contributions, backing for the New Enterprise Allowance and Start-Up Loans Programme, ambitious investment in infrastructure – not least broadband – networks, taking more small firms out of the regressive business rates system and ending a worsening £23bn late payment crisis.
He added: “More than a million firms have now taken on bounce back loans to see them through this incredibly challenging period. They now need a guarantee that they won’t have to start paying them back until they’re making a profit. Such an assurance will encourage them to invest and expand today, rather than hoarding cash for fear of what’s coming down the line.
“In four months’ time the UK will transition to its new relationship with the EU but we still have no idea what that relationship will look like. When EU-UK talks resume on Monday, we need to see negotiators on all side accelerating their efforts to agree a pro-business deal in acknowledgement of the fact that time is of the essence.
“It’s been encouraging to see UK efforts to strike new trade deals. It’s critical that any new UK free trade agreements include a dedicated small business chapter spelling out exactly how each deal will protect and promote the interests of the UK’s 5.8 million small businesses.”