With the Spring Budget only a week away, small business owners are keen to learn the measures the Chancellor will unveil to help them in the current economic climate.
With this in mind, I’m getting in touch with comments from the business comparison experts at Bionic on why the economic climate is so tough for SMEs right now, what SMEs are calling for in this budget, and what do forecasters think will actually be announced.
Les Roberts, Business Comparison Expert at Bionic, said the following:
“From record inflation rates, unstable energy prices, commercial property rent hikes, and increased supplier and stock prices, the current economic climate is volatile for small business owners.
“Although energy prices might be stabilising after a harsh couple of years, prices are still around double what they were in 2021 and Government support has been scaled back considerably.
“As part of the new Net Zero energy package initiative, the Minister for Energy Efficiency and Green Finance has selected 12 ‘winning’ businesses to receive a combined funding of up to £6 million to fund initiatives aimed at reducing carbon emissions.
“However, as only a limited number of businesses can apply for the new package, some SMEs are arguing that this initiative does not go far enough. What’s more, although the package aims to help businesses cut down on their energy usage, it can’t help bring down the standing charges energy suppliers choose to set. The costs of supplying energy are on the rise for firms, meaning standing charges are likely to keep increasing to ensure profits.
“With all this in mind, SMEs are calling for vital support from the Government on the following:
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Business rates relief – “Business rates are currently expected to rise in April as freezes announced in the Autumn Statement come to an end. The hospitality sector, in particular, continues to call for business rate reform and an extension of relief to allow their sector to thrive amongst rising costs.”
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Increased budget for green projects – “Organisations are calling for support to help them reach their net zero targets, especially as the Prime Minister announced a U-turn on green targets late last year. Funding is especially needed in sectors including carbon capture and storage and hydrogen production, according to the National Infrastructure Committee.”
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Broadband contracts – “The price of contracts have increased by 17% over the past year. Businesses are calling for the Government to step in, and stop companies from raising their costs above inflation, especially mid-contract price hikes.”
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Extended energy bill support – “As the current Energy Bill Discount Scheme is expected to end on 31 March, many businesses are calling for an extension of this as the energy market remains volatile.”
“In terms of upcoming predictions for the Spring Budget, it’s important to know this could be the final budget before the general election, so we should expect tax cuts directed at the public to act as voting incentives. The Prime Minister promised a cut of 1-2% to the basic rate of income tax as part of his 2022 leadership campaign. There is also the possibility of a break in the freeze on the income tax personal allowance, higher rate threshold and NICs threshold.
“However, whilst workforce focused initiatives, like tax cuts and a rise in minimum wage, may attract voters, it’s important to remember that behind each initiative is a small business owner, struggling to make ends meet. With a rise in wages, some business owners might have to rethink their workforce structure or cut back on costs in other areas.
“With businesses also expected to face higher business rates from April as we enter the new tax year, SMEs will be collectively hoping that beyond consumer tax cuts, this Spring Budget will focus on small business growth and provide much needed assurance as the UK enters recession.
