Rising cost fears hit small business confidence

The Forum is warning that the struggling small business sector – widely regarded as the catalyst for economic recovery and growth – must not suffer unduly as a result of the difficult steps necessary to re-balance the economy.

In all, 37% of business owners surveyed in May 2010 said the cost of doing business – excluding tax – has increased. Almost a quarter (24%) said the tax burden has increased and 28% believe that existing levels of taxation are too high.

According to the monthly report, confidence has been dented by fears that tax increases in the Budget could hit small businesses hard.

The coalition Government is expected to reveal a raft of tax measures aimed at reducing the UK’s huge deficit, alongside significant public spending cuts. They include possible changes to capital gains tax and an increase in VAT, a rise in employers’ national Insurance contributions for some staff – although the 1% increase originally planned has been partially scrapped – and changes to corporation tax.

“All eyes are on the 22 June budget for the kind of policies needed to help small businesses grow,” said the Forum’s head of policy Matt Goodman. “We know that public spending will be cut to help get the deficit down, but there will be knock on effects to public sector contract opportunities and business support measures, so it is important that the coalition government gets it right - particularly in the area of tax.

“Running a business and controlling costs can be difficult. The Government’s emphasis must be on helping entrepreneurs to run their businesses more effectively, and fostering confidence as well as re-balancing the economy.”