The Forum of Private Business is calling for robust policies in tomorrow’s Budget which reduce the national debt while stimulating small business growth.
According to the watchdog, the former administration’s forecast 3.25% growth in 2011 was over-optimistic. Instead, it believes the economy will grow by just 2.6%.
“These are more realistic projections of growth which reflect feedback from our member businesses and the general mood of the economy at the moment,” said the FPB’s head of policy Matt Goodman.
“The government has a difficult task in this emergency budget. While addressing the gaping public deficit in order to stabilise the economy must be the first priority this must be balanced with continued support for the drivers of growth – small businesses.”
The FPB says key priorities include driving growth by improving market conditions, reducing the deficit with targeted and public spending programmes and providing continuity of government support programmes for small and medium-sized enterprises.
According to the FPB business confidence is being hit by rising costs, falling turnover and cash flow difficulties as a result of late payment and relatively poor credit conditions. It is also being undermined by uncertainty over likely tax rises and public spending cuts.
In all, 37% of business owners surveyed last month said the cost of doing business had increased. Almost a quarter said the tax burden had grown and 28% believe that existing levels of taxation are too high.
Orders fell for 21% of businesses surveyed, turnover was down for 28% and profitability down for 37%. Almost one in five firms experienced increases in late payments in May and 20% reported that other cash flow difficulties were rising.