Following the Chancellor’s Autumn Budget small businesses are concerned over inflation and rising taxes, the Federation of Small Businesses (FSB) has said.
The FSB acknowledged that the Chancellor has delivered some measures to help the current decline in business confidence along business rates reform.
Gabriele Sabato, Co-Founder & CEO at Wiserfunding who is a SME credit expert and advises top tier clients like Revolut also voiced concerns over inflation fears for small businesses.
He said, “Brief glimpses of positive economic indicators have quickly been overshadowed by inflation fears, labour shortages and supply chain issues that could yet derail a rebound and set the UK on course for a sustained period of stagnation.”
Regarding the minimum wage, he added, “Beyond the headline Budget policies, the key issue is the impact on long term productivity growth, where the UK has long trailed OECD peers. If businesses are more worried about paying back pandemic debt whilst funding a wage rise amid staff shortages, these issues will detract from the much needed investment in future productivity.
“Further, looming interest rate rises will increase the cost of borrowing and could put new investment even further out of reach for the majority of British business owners.”
Gabriele argues small business debt should be the real bellwether, he said, “Recent surveys show that less than 10 per cent of small business owners are now concerned that the pandemic will cause them bankruptcy.
“Yet the extraordinary 82 per cent year-on-year increase in debt small and medium-sized businesses took on, accounting for £213bn, will impact the overall growth trajectory of the UK.
“The Chancellor has to strike a balance between debt and investment, not only on the national balance sheet and infrastructure spend, but the ability of British businesses to both pay off debt sustainably and attract new investment that will boost productivity.
Though well-intentioned, the 6.6 per cent rise to the minimum wage is a fraction of the real wage increase already experienced in the last 6 months by small businesses in the UK.
“There is a proper war for talent in most parts of the UK and this is driving wages to unsustainable levels. Inflationary pressures are likely to imminently trigger the Bank of England’s long-mooted interest rate rise.
“This is likely to further dampen the prospect of small business investment and depress productivity growth, especially if policymakers at the Treasury and MPC are not aligned and fall out of touch with the reality of doing business in the real economy.”