By Rob Blythe, Co-Founder of Instant Impact
Yesterday, figures published by the Office of National Statistics (ONS) revealed that unemployment levels had dropped by the sharpest quarterly rate in a decade, falling by 86,000 to 2.51 million in the three months to October.
These statistics are testament to a stronger labour market emerging, and, combined with tentative growth forecasts for 2013 and 2014, have given reason for cautious optimism that the British economy is starting to improve.
SMEs hold the key to grassroots economic growth. But why? SMEs should be more vulnerable to economic downturns than large corporations: with fewer assets, a smaller customer base and less able to spread their business across multiple product and geographical platforms as well of course as the general falling demand and lack of bank lending, SMEs should be struggling like the rest of them.
These recent statistics demonstrate that SMEs are not only coping, but excelling. Successful small companies are demonstrating the role they have to play in the economy in generating innovation and growth, successfully riding the economic downturn through a combination of flexible business and labour models and an innovative and entrepreneurial approach; creating jobs vital for the economy to return to full employment.
With the economy unable to continue to function on a debt based framework and as big companies increasingly export their business overseas in an effort to cut costs, SMEs are becoming increasingly important as a vital part of Britain’s domestic employers. Small businesses can play an even greater role in the economic recovery but only if they get the financial support they need.
With 4.5m SMEs in the UK, employing 13.8 million people, SMEs are the backbone to the UK economy.
Yet the majority of SMEs were left understandably frustrated by George Osborne’s supposedly ‘business minded’ budget, favouring larger corporations rather than small businesses. The corporation tax break is not applicable to small businesses turning over less than 300,000 and will regardless be undermined by the increase in business tax rates by 5.6% from April.
Calls for the government to implement further tax breaks for small businesses and investing in the sector to enable growth will be heightened by yesterday’s figures and indication that SMEs are where growth can sustainably be achieved and can drive the UK out of recession. The more that is done to support small businesses to help invigorate the British economy the better. There is always, however, further to go.
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