Budget lacking in wealth-creation for SMEs

Many of the UK’s smaller sized businesses feel that the Autumn Statement is high on stealth-creation and low on wealth-creation, according to the FSB.

The Federation of Small Businesses (FSB) believe that freezing thresholds will hit SMEs, while growth measures will not be enough to spark the needed economic recovery.

Responding on the day of the Autumn Statement, National Chair of the Federation of Small Businesses (FSB), Martin McTague, said, “While tackling inflation is essential, so are measures to create conditions for prosperity, growth and support enterprise. Today is a missed opportunity to avoid further economic slowdown.

“Small businesses, which account for more than 16 million jobs in the UK, were already facing an acute cost of doing business crisis through soaring costs, falling revenues, shrinking availability of affordable finance, and a rise in invoices being paid late.

“On top of all that, they now face even higher taxes, cuts to innovation, and a recipe for a longer and deeper recession.”

Martin added, “Freezing the threshold for employer National Insurance at a time of such high inflation is a stealthy hike in the jobs tax, just as recessionary pressures threaten an increase in unemployment. Alongside the understandable rise in the Living Wage, this Budget will ramp up the costs of employment without offsetting that with measures to reduce other business costs.

“The few saving graces here are the retention of the Employment Allowance at its current level, which was hard fought for by FSB, and the continuation of the lower National Insurance rate for the self-employed and employees.

“Stealthily freezing the VAT threshold at a time of sky-high inflation will both drag more struggling small firms into scope for the tax, while disincentivising others from growing. FSB’s research shows one in four of small firms and the self-employed (24%) are held back by the VAT threshold.

“It is welcome that the energy support package for small firms will remain in place until April, helping them through a very tough winter ahead. However, going forward, continued support should not be viewed through the narrow lens of specific sectors, but rather based upon the size of a business.

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