The Chancellor has succeeded in having his cake and eating it in his Autumn Statement, offering us both austerity and government spending on major infrastructure projects.
He’s also offering a number of measures to help small businesses – some of which I list below. The question is, will it be enough to give UK businesses confidence?
Yes there are measures to make it easier for businesses to access finance, especially SMEs. For example, the Government has underwritten £40bn in extra bank loans to small businesses.
However companies will not be prepared to take on more debt until they have more confidence in the future of the UK economy.
How can we measure this? By whether the number of companies prepared to invest goes up.
That’s going to be a tough test to pass.
We know from our recently published Business Confidence Monitor that the economy is likely to shrink by 0.2% at the end of this year. And that a double-dip recession is increasingly likely.
So what does the Government offer business? In no particular order:
- Business rate holiday for small firms extended to April 2013. In the following years, there will be the possibility of deferring 60% of the bill.
- R&D tax credit to help businesses invest.
- A new Seed Enterprise Investment Scheme, to encourage individuals to invest in SMEs, which offers 50% tax relief to investors
- Several new financing schemes for business including a new £1 billion Business Finance Partnership for medium sized businesses, an extension of the Enterprise Finance Guarantee Scheme to help start-ups including a one-year waiver on capital gains through the scheme, and a further £1 billion for the Regional Growth Fund over this parliament.
- Credit easing: A National Loan Guarantee Scheme, the Government will underwrite £40 billion in extra bank loans to small businesses, expected to cut interest rates on small business loans by up to 1%. The scheme will guarantee bonds sold to UK banks on condition they lend the cash to firms with a turnover of up to £50m.
- A review of employment legislation with proposed new rules around unfair dismissal to make it easier for small firms to dismiss employees, and around health and safety and TUPE rules.
- Less burdensome social and environmental goals, for example help to carbon-intensive industries like smelting to stop them relocating outside the UK.
- A youth contract for out of work young people which includes work experience and paid apprenticeships which might help small businesses take on young people.
- Government investment in Maths academies and Free Schools, which may produce more young people with the numeracy skills that businesses need.
- Government investment in 500 road, rail and other infrastructure projects to help stimulate the economy around the country.
If you want to read the full statement, it’s here.