2011 More Challenging for SMEs, say Business Groups

The next 12 months are likely to be even more challenging for small firms than 2010, business groups have warned in their New Year messages.

The main business groups have also called on the Government to help small firms grow so they can lead the UK’s economic recovery. Forum of Private Business chief executive, Phil Orford, said trading conditions will remain tough in 2011 due to reduced public spending, rising costs and increased late payments.

“In 2010 Britain crept out of the recession, but many small businesses will find the year ahead even more challenging as they try to grow, creating the jobs lost in the public sector and driving economic recovery.”

“Removing the barriers to growth created by tax and red tape must be a cornerstone of emerging enterprise policies. We are pushing for the UK’s complex tax system to be simplified and complying with regulations to be made more proportionate for small firms.”

The need for more support to help small firms expand was reiterated by the Federation of Small Businesses (FSB).

“2011 must not be remembered for public sector cuts and a jobless recovery, but for a small business programme for growth.”

said FSB chairman, John Walker.

“Job creation is key in kick-starting meaningful economic growth. Over the last decade small firms have been responsible for more than 80% of new jobs in the private sector. Our research shows that small businesses plan to decrease their workforce early in 2011. But if the Government steps up, the trend could be reversed.”

“The Government has already made a start by introducing the NIC holiday for new firms, but this is only scratching the surface. The scheme must be extended across the country to existing firms with up to four members of staff.”

Double-dip not expected

The Confederation of British Industry’s (CBI) New Year forecast warned that the economic recovery could slow markedly in the first few months of the year.

“The VAT increase will be taking effect and the construction sector will start to feel the pain of public spending cuts.”

said CBI director-general, Richard Lambert.

“Quarterly growth in the next three months could be down to as little as 0.2% compared with 0.7% in the third quarter of 2010.”

“[But] we are not expecting a double-dip recession or a dramatic surge in inflation and interest rates. Overall employment at the end of 2011 will be higher than it is today, with growth in the private sector more than offsetting job losses among public sector employees.”

2011 More Challenging for SMEs, say Business Groups

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