By Claire West

Economic stability to give small businesses the confidence to grow should be the main message when the Chancellor delivers his Budget on 23 March, according to the Federation of Small Businesses (FSB).

Launching its Growth Manifesto at a speed briefing in Westminster, the FSB told MP’s that decisive action was needed to improve the growth prospects of small firms to avoid a jobless recovery.

The UK’s five million small businesses are best placed to grow the economy and pick up the slack that will be left as the public sector cuts take their full effect, but they need to have a stable economic background in which to do this.

FSB members supported the decisive action to cut the large public sector deficit. However, confidence among small businesses fell at the end of 2010 as did employment intentions. In order to avoid a jobless recovery the FSB believes the Government must show leadership to enable the private sector to strengthen the recovery.

The FSB is calling on the Government to:

• Extend the National Insurance holiday for one year to existing businesses with less than four members of staff that take on up to three additional employees. Per year, each employee would contribute an additional £6,000 to the Treasury through employee national insurance and income tax.

• Reverse plans to increase fuel duty from 1 April 2011 and introduce a fuel duty stabiliser to help to control inflation, especially as troubles in the Middle East threaten to increase oil prices further. More than 60 per cent of businesses are unable to absorb the cost of the increases and one in 10 firms has said they would lay off staff as a result of the costs.

• Tackle rising youth unemployment by providing finance for micro-businesses to take on an apprentice and extending the Graduate Internship Scheme, due to come to an end in March 2011, to create an additional 5,000 places. The extension of the Graduate Internship Scheme would instantly save £1.5 million in benefits payments, as well as contribute an additional £8.77 million to the Treasury over the course of the year.

• Declare a moratorium on all new employment legislation for the 12 months following the Budget, to help create a more predictable regulatory environment to enable small firms to take on staff.

John Walker, National Chairman, Federation of Small Businesses, said: “The Budget must provide economic stability and look to ways to nurture entrepreneurship and allow small firms to grow in order to create employment opportunities. With the downgrading of GDP in Q4 2010, it is clear that the economy is in a precarious position and small firms that lack confidence in the business environment will find growth risky.

“The Government does have policies available to show small firms it is serious about supporting growth, such as extending the National Insurance holiday to existing businesses that take on new staff and keeping to its manifesto promise and introducing a fuel duty stabiliser.”