Monday, July 15, 2024

Latest ONS numbers ring alarm bells for SMEs, says FSB

Small firms see the domestic economy as their top barrier to growth, and flat GDP result in April rings alarm bells, according to the Federation of Small Businesses.

Latest figures from the ONS shows that GDP was flat in April, promoting the FSB’s Martin McTague to say the economy was not yet delivering the conditions that small businesses needed to flourish. He said: “Coming off the back of solid growth in the first quarter, it is especially disappointing. With the election just weeks away, no political party has yet set out a compelling vision for how it would achieve a steady increase of two to three per cent growth per year. To ensure that GDP climbs – and stays – at healthy levels, the next Government must prioritise this. It’s the only way we can rebuild the number of small businesses in the UK from 5.5 million to the pre-pandemic level of six million.

“Construction output fell for the third month in a row, underlining the need for a new Small Housebuilder Strategy, to ensure sufficient capacity to achieve ambitious housebuilding targets.

“Our latest Small Business Index shows that while small firms’ confidence score in the first quarter climbed to positive territory for the first time in two years, the domestic economy was still seen as the top barrier to growth, and today’s GDP result could contribute to a decline in the findings for the second quarter.

“Now that the National Living Wage (NLW) increase has kicked in, employment costs are a growing pressure. To help offset that, our election manifesto calls for the Employment Allowance to be raised to £6,500 and automatically go up each year with the NLW.

“Whoever takes office on July 5 should also see through a Small Business Act, establishing legislation to bolster small businesses on crucial issues. This does not require any extra spending but will bring a wealth of benefits to the economy. The Act would enshrine measures to clamp down on big businesses with poor payment practices, improve access to finance, and put in place a 33 per cent SME statutory public procurement target. Other measures could include reforming business rates and increasing the number of start-up loans.

“Small firms are the key to economic recovery – after all, they’re the ones who drive innovation and create jobs. Supporting them is a sure-fire way to strengthen our economy and ensure lasting growth. The next Government has its work cut out for it, but with the right focus, it will be able to make a substantial impact on the economy.”

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