First £10,000 Free of Tax for SMEs or Full Steam Ahead Into a Crisis! (From Business in Dorset)

First £10,000 Free of Tax for SMEs or Full Steam Ahead Into a Crisis!

2:01pm Tuesday 28th October 2008

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THE British Chambers of Commerce Quarterly Economic Survey (Q3 2008) received over 5,000 responses from businesses of all sizes and sectors and virtually all the key national balances have worsened, and many are in negative territory for the second quarter in a row.

Domestic balances, sales as well as orders, have moved deeper into negative territory, for both manufacturing and services All firm sizes, in both sectors, show negative Q3 domestic balances, a disturbing and unusual situation Manufacturing export balances plummeted in Q3 Collapse in confidence across sectors All confidence balances, turnover as well as profitability, fell to record lows in Q3, for both manufacturing and services Cash flow balances remain negative in this quarter Recruitment dip across sectors Investment balances in plant and machinery moved into negative territory for both sectors BCC Director General David Frost said “Confidence is critical and it is vital that businesses are shown leadership. “The Government needs to say that business taxes will be cut. The Bank of England needs to cut interest rates and politicians need to get behind our businesses in these challenging times. More than just growth makers – businesses are critical to our local communities.”

David Kern, economic advisor to the BCC, added: “Overall, the alarming Q3 results point to worsening dangers of major economic downturn and rising unemployment. The results support the view that a UK recession has started and the downturn is getting worse. The domestic economy is under immense pressure. Without forceful and urgent corrective action, there is a serious danger that the recession will deepen and cause huge damage.”

Recent bank bail outs and lifelines to the financial institutions are not being translated into better deals to mortgage borrowers and loans to business - banks must be made to be more supportive and sympathetic to the needs of business, in these bad times and return to loans at 2007 levels without the huge fees that are now being imposed. Further, called for, reductions in interest rates will also be welcomed by probably the worst hit group, SMEs, struggling to cope with in some cases a massive drop in business and customer confidence. The calls for help for business are growing!

With the “Cash Flow Crunch” rolling like a Tsunami through the business world, following the “Credit Crunch” causing business failures to rise dramatically – urgent simple tax concessions such as reintroducing the first £10,000 of income/profit as Tax Free, to SMEs, might be the kind of fundamental corrective action that could rescue this group and at the same time would reduce administration costs for the Government.

Chris Slocock BCC Business Representative for the South West Vice Chairman South West Chambers of Commerce Past President Dorset Business

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