Small Business News | SME’s plan own spending cuts

An article recently published by SME Web suggests that VAT increases and National Insurance measures could force a spending decrease and inhibit expansion for the UK’s small and medium enterprises.

The coalition government has been relying on a boom in the private sector in order to support the UK economy, particularly as large public sector cuts are implemented. However a study conducted by YouGov and Safestore reveals that with the increase in VAT from 17.5% to 20%, a third of UK small and medium enterprises believe that this rise will be detrimental to their business. A further 19% of SME’s say they plan to either freeze or lower salaries in order to survive new measures. When questioned about the NI measure, 31% did not believe that the raise would encourage expansion of their business. With over 12 million people employed by SME’s in the UK, this could strike quite a blow on both a personal and wider economical level. Moreover any negative effects from the VAT increase may affect small firms who will have to pass the increase on to their customers, unlike big businesses who can absorb the cost.

To read the full article, please visit SME Web

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