By Lee Murphy, Owner of cloud accountancy software Pandle
In Chancellor Phillip’s Hammond’s first and ‘final’ autumn statement, he announced the borrowing would be £122 billion more than initially planned, and with the estimated cost of Brexit sitting at £58 billion it the economic forecast is gloomy indeed.
Though these predications are astounding, they are not necessarily accurate reflections of for the real economy. SMEs operate on a much smaller scale than the big businesses in the UK, and operate below the grade of macro-economic policy.
Additionally, to lessen Brexit anxiety, Hammond put forth several autumn initiatives that are great news for entrepreneurs. As the UK is contentedly one of the most entrepreneurial nations in the world, the incentives set certainly lay the foundation for SMEs to prosper.
With the dedication of £400 million for the British Business Bank, which is anticipated to be matched further by private investment, Hammond is looking to unlock £1 billion in investments for innovative firms to start scaling up.
As it stands, and has been previously highlight by Sherry Couti’s report, there’s a ‘scale-up’ gap for small businesses who are on the precipice of expansion but cannot quite make the jump without some additional support. Two years the number of businesses employing 250 or more employees was failing. An RBS analysis stated that by closing this ‘gap’ 238,000 extra jobs could stand to be created – providing a economy-stimulating £38 billion in turnover within three years.
Furthermore, Hammond has stated a commitment for the government to explore options for levying tax credits on above-the-line Research and Development investments. This will provide encouragement for small and medium businesses to strive to keep ahead of the competition – an essential condition for the economy to prosper.
While Brexit, and withdrawal of our existing international trading relationships, has stirred concerns around business’ export market, the Chancellor is permitting UK Export Finance – to double its risk allowance to £5 billion – meaning that traders conducting overseas deals with have a larger safety net beneath them. The move should ease fears that Brexit will discourage exports and overseas trading, and if anything will encourage more businesses to plans for trading in new markets.
In terms of technology, those businesses that struggle with poor internet speeds and connectivity, will celebrate the plans to commit £1 billion to a series of measures that will connect more of the UK up to fiber internet, and will open the door to the impending 5G data network.
There has been a £100 million allocation to Innovate UK, an organisation that supports innovative businesses, and has already helped over 7,600 organisations with projects that are estimated to have added more than £11.5 billion to the UK economy and created 55,000 new jobs. There’s also an extra £500,000 set aside to support specialist fintech businesses.
Brexit is certainly a tough pill to swallow, especially if you voted to remain. It’s no secret that the UK will not get everything it wants, especially in regard to free trade and immigration. However, it’s most likely that the main compromise will be financial, an ongoing financial contribution that is, in order to reap similar benefits that have now from the EU.
It’s important to look ahead and to not lose confidence that UK businesses will prosper in an independent UK. Perhaps one of the worst-case scenarios will be if the EU members decide to put steep taxes on the imports of their products, but in this case we can always look elsewhere, perhaps even to the United States.
The UK is ranked as seventeenth by World Bank as one of the easier countries for starting a business, and this is probably helped by the fact that we have a lower tax bracket for corporations.
Despite the upcoming challenges, businesses should be able to thrive with the right mindset and by taking advantage of these new incentives on offer. We are an entrepreneurial national, and should have no fear that we can overcome the Brexit speed-bump; and with the recent changes that Hammond laid out in the Autumn Statement there are many good reasons why British business will survive.