Yesterday Chancellor Philip Hammond announced his Autumn Statement to Parliament, and the wider implications of his policy changes are sure to affect small and medium-sized enterprises (SMEs) across the UK. But will those changes be beneficial or detrimental to conditions for the UK’s owner-managed businesses?
In one of the main focal points of the statement, the chancellor revealed a £23 billion National Productivity Investment Fund to be spent on infrastructure and innovation in an attempt to fix the productivity challanges in the UK.
Professor Stephen Roper of Warwick Business School, said: "this is a gamble".
He added: As the Chancellor indicated it currently takes an average UK worker 5 days to generate the same productivity as German employees generate in 4 days.
"How effective will the Chancellor’s package of measures be in addressing the productivity challenge? Only time will tell, but public investment alone is unlikely to close the gap. UK firms too will need to significantly increase their investment, which is perhaps unlikely given the uncertainties of Brexit.
"Other aspects of the Statement will be welcomed by business. Confirmation of planned corporation tax reductions to 17 per cent, business rate reductions and rural rate relief are all positive steps. Less welcome in some quarters will be the increase in insurance taxes.
"Reflecting Theresa May’s comments in June on the steps of 10 Downing Street, Hammond signalled his aim to ‘build an economy which works for everyone’. Cash for regional transport, City Deals and the Growth Fund will help perhaps, but there was little here to directly address issues of inclusivity or boosting growth among the UK’s poorest communities."
However, Emma Jones, founder of small business support group Enterprise Nation it was a good decision to invest in infrastructure and technology, but expressed concerns for the future of smaller businesses in the UK. She said: "We need to boost our economy, we [can] all benefit from that. It's also good news that the rural economy will benefit from business rates relief.
"But for the only reference to hard-working small businesses and the self-employed to be in connection with tax avoidance is worrying. Is this a dawning of a dangerous new era for entrepreneurs in post-Brexit Britain?"
Niels Turfboer, managing director UK, Spotcap, said the Autumn Statement fell short in providing adequate incentives to SMEs to execute their growth strategies with confidence.
SMEs currently account for 99.9% of the UK’s private sector companies and will contribute £217 billion to the economy by 2020.
Mr. Turfboer added: "It is important to remember that following the Brexit announcement, a fall in interest rates and a predicted spike in inflation, SMEs are coping with huge challenges and an uncertain economic outlook. They need reason to feel confident.
“Some of the points mentioned will indirectly help drive SME growth. However, the overall verdict is that the Chancellor could have provided more specific initiatives on how to boost overall SME growth – a corner-stone of the British economy. For example he could have addressed access to finance for SMEs, which will be an important aspect of helping increase productivity and competitiveness that is a current focus for the government.”