GDP Result Leaves Small Firms Feeling Flat

Responding to the announcement that Gross Domestic Product (GDP) showed flat growth in July, and rose by 0.3% in the three months to July, Policy Chair of the Federation of Small Businesses (FSB), Tina McKenzie, said: “July’s flat GDP result is a disappointment, and is another sign that the economy is stuck, rather than firing on all cylinders. Small business owners will now be hoping to see accelerating growth over the second half of the year."

“Small firms’ confidence going into the summer months was at a low ebb. Flat or near-flat growth, with only a small uptick over the previous three months, is not enough to allow small firms to cope with increased costs. Too few firms will be able to invest to drive the expansion that is needed for the economic recovery we all want to see, which will be contingent on their success."

“July’s Small Business Plan, which FSB worked on extensively in partnership with the Government, contains a wealth of great proposals to help get small businesses on the growth track. We look forward to seeing them put into action as soon as possible."

“The Autumn Budget is a huge opportunity for the Government to make life easier for small firms, to everyone’s benefit. Making business rates fairer for small businesses must be a priority, to reduce the burden of this day-one cost that discourages new openings and deters investment, suppressing the recovery of high streets. The Government should expand Small Business Rates Relief and make full use of new powers to deliver permanently lower multipliers for small retail, hospitality and leisure firms."

“Increasing the VAT threshold would encourage greater levels of economic activity, and would lead to additional tax revenue in the crucial final year of the Chancellor’s fiscal rules, according to the OBR and the Treasury."

“In the meantime, however, the Employment Rights Bill threatens to be a real brake on growth if it is passed unamended. Extending protections against unfair dismissal to the first day of employment means putting massive risks on small employers’ shoulders. If making one hiring error can lead to a vastly expensive, stressful, and time-consuming tribunal process in an already overloaded system, too many businesses considering expansion will understandably decide it’s a risk they don’t want to take."

“To stop these tentative growth shoots being crushed by the Bill, with over nine in ten small employers concerned by its draft provisions, a serious rethink is needed before it is signed into law.”