Looming tax rises will damage economic growth, says FSB

With negative findings from the latest ONS report, the Federation of Small Businesses is warning that tax rises will only cause further damage to the economy.

The Office for National Statistics (ONS) figures revealed that in Q3 2021, economic growth slowed with the level of quarterly GDP now 2.1% below where it was before the coronavirus pandemic hit.

Additional FSB research shows that 79% of SMEs that will be impacted by the imposition of import checks next year are not fully ready to comply with new paperwork. Twenty-one per cent of small exporters has temporarily or permanently stopped exporting to the EU – a further 7% are considering stopping sales to the bloc.

Mike Cherry, FSB National Chair, commented, “These deeply concerning figures point to the scale of the mammoth task that lies ahead in securing a sustainable economic recovery.

“As they attempt to focus on getting back to full strength, small firms are up against supply chain disruption, spiralling costs and debilitating skills shortages.

“Unfortunately, it’s against this backdrop that the government has decided to hike national insurance contributions and dividend taxation.”

Cherry added, “We are now hurtling towards a flashpoint in April when the jobs tax and national living wage will rise at the same moment whilst business rates also kick in for many.

“The drop in retail sales is especially worrying to see as we head into Q4 – we’d urge everyone to get behind their favourite small businesses over the coming months in what will be a make-or-break festive season.

“Too many small exporters have already thrown in the towel in the face of fresh admin resulting from a new EU-UK trade deal, rising shipping fees and global trade disruption.

“They tend to be among our most profitable and innovative firms – we need more, not fewer, small businesses selling internationally if we’re to bounce back from one of the most severe economic shocks in history.

“The Budget was the government’s chance to bring in measures to assist small firms with rising employment, tax and shipping costs – it missed that chance.”

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