What the Autumn Statement means for SMEs

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The Chancellor of the Exchequer has today (November 23rd) given his Autumn Statement, in which he updates parliament - and people across the country - about the government's taxation and spending plans.

So what did Philip Hammond say that is particularly pertinent for small and medium-sized enterprises in Britain? Well, quite a few things stood out.

Business rates reduction package to be implemented

Mr Hammond has confirmed that the business rates reduction package - worth £6.7 billion - will be put in place.

The Chancellor also stated that the communities secretary will lower the transitional relief cap from 45 per cent in 2017 to 43 per cent, and from 50 per cent to 32 per cent in 2018.

Furthermore, the Rural Rate Relief will be increased to 100 per cent, which Mr Hammond believes will give businesses in rural areas a tax break worth up to £2,900 a year.

Investment in transport and digital infrastructure

Mr Hammond said in his keynote speech that both families and businesses benefit directly from "economically productive infrastructure".

He therefore stressed his commitment to investing in the UK's road network and improving digital connectivity throughout the country.

"Our future transport, business and lifestyle needs will require world-class digital infrastructure to underpin them, so my ambition is for the UK to be a world leader in 5G," Mr Hammond said.

"That means a full-fibre network; a step-change in speed, security and reliability."

This has been enthusiastically welcomed by the Federation of Small Businesses (FSB), which said it has been calling for the government to increase investment in local roads and digital connectivity "to help rebalance the UK economy".

Additional investment in R&D

Mr Hammond told MPs during his Autumn Statement that not enough money is being invested in research, development and innovation in the UK.

As a result, he believes Britain must build on its strengths in science and tech innovation to ensure "the next generation of discoveries is made, developed and produced in Britain".

The Chancellor said this is particularly important as the pace of technology is advancing and competition from the rest of the world is on the up.

£400m to improve small business finance

The government will inject an additional £400 million into venture capital funds through the British Business Bank, which it believes will unlock £1 billion of new finance for growing firms.

Furthermore, UK export finance capacity is to be doubled to make it easier for British businesses to export overseas.

Mike Cherry, national chairman of the FSB, has hailed this development, saying: "The latter is vital as we need to reach new markets in the wake of the Brexit decision."

Economy will keep growing

While the uncertainty posed by Brexit means it is difficult for the Office for Budget Responsibility to make exact forecasts, the general trend in the coming years seems to be one of continued growth.

The latest forecast suggests the economy will grow by 2.1 per cent in 2016 - higher than was forecast in March - while growth will then slow down to 1.4 per cent in 2017.

This is expected to be driven by lower investment and weaker consumer demand, which in turn will be fuelled by greater uncertainty and higher inflation resulting from sterling depreciation.

While Mr Hammond has acknowledged this is slower growth than he would like, he stressed it is still comparable to the IMF's forecast for Germany and higher than predictions for other major European economies, such as France and Italy.

Growth in the UK economy is then expected to recover to 1.7 per cent in 2018, 2.1 per cent in 2019 and 2020 and two per cent in 2021.

Mike Cherry of the FSB has therefore insisted that stronger fiscal interventions will be required to boost gross domestic product next year.

"Small firms want to grow, export, innovate, recruit and be more productive - and they need to know as soon as possible the framework they will operate in," he said.

Factors such as the upcoming Brexit negotiations and the somewhat precarious state of Britain's public finances muddy the waters and create an uncertain operating environment for SMEs.

But the expectation that the UK will avoid falling into recession and continue seeing economic growth should be heartening to smaller firms looking to consolidate their positions in 2017.