Small businesses seek support in the upcoming Autumn Statement to protect growth

IN: Business news

Chancellor of the Exchequer George Osborne approaches the Autumn Statement with the British economy in a much more promising condition this year, but experts warn continued support for SMEs will be vital to maintain growth.

With the OECD upgrading growth forecasts for the year to 1.4 per cent, the government undoubtedly faces a less daunting task with this year's Autumn Statement, scheduled for the 5th December, than twelve months ago.

"The Chancellor will be delighted to see quarter on quarter economic growth in the country," agreed Alexander Jackman, Head of Policy at the Forum of Private Business, admitting, "It's clear he has his finger on the pulse of UK businesses. His task now is to try and cement the growth in the UK."

Despite this optimism, recovery remains fragile and the small business community in particular is likely to struggle if Osborne's plans fail to address the challenges facing the sector.

Primarily, as cited by the Federation of Private Businesses earlier this week, business rates continue to consume a major proportion of SME revenues, set to total £26.7 billion this year. Worse still, many SMEs claim current consumer price sensitivity forces them to absorb rising costs themselves rather than pass them on to customers, threatening to erode profits entirely.

In response to this issue, The Telegraph has called for government to freeze business rates for the next two years, with the FPB adding that current rate relief schemes must be extended. As expressed by the FPB;

"More than a quarter of a million firms rely on 100pc rate relief to survive, but relief at this rate is due to expire next year. The impact of this would be equivalent to introducing a new tax on 293,000 small and micro businesses just as the economy is starting to recover."

Beyond the business rates debate, small businesses are also hoping to see Osborne consider the equally pressing issues of late payments and access to finance. With reference to the former, extended payment terms mean even some of the most profitable SMEs face liquidity issues, unable to embrace opportunities to expand at the risk of overtrading.

Similarly, continued reluctance of mainstream banks to lend to smaller companies also acts as a barrier to growth, with Vince Cable showing concern this week over the lack of impact government schemes have had to stimulate SME lending.

While government may face many competing claims for support in this week's Autumn Statement, Aldermore firmly believes SME issues must be recognised as a priority. As these businesses account for almost 60 per cent of private sector employment, providing opportunities for these businesses to grow is likely to bring substantial benefits for businesses and homeowners alike. 

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