The British Chambers of Commerce (BCC) has called on Rishi Sunak to introduce an ‘emergency’ budget to help small businesses cope with rising costs.
The business group called on the Chancellor to postpone the recent National Insurance rise, cut VAT on energy bills to 5 percent and to reintroduce free Covid tests for companies to help them combat high absence rates.
The BCC believes that these measures will take some pressure off businesses and help increase productivity in the economy.
Last week, the Bank of England warned that the UK economy would slip into recession this year, after energy prices pushed inflation above 10 percent.
Speaking to the Financial Times, BCC director general Shevaun Haviland said that the Chancellor could not afford to wait until the Autumn Budget to intervene.
“It is easier to keep a business open than to get them to reopen once they have closed,” she told the newspaper.
The 1.25 percentage point increase to National Insurance in April 2022 affected employees, employers and the self-employed. The BCC says that reversing this increase and postponing it until at least 2023 would not only ease companies’ balance sheets, but also help boost consumer confidence.
Cutting VAT on business energy bills from 20 percent to 5 percent would provide some protection for businesses. A recent study from Cornwall Insight found that business gas prices had increased 250% in the first quarter of 2022, with small businesses among the worst affected by the increase.
Many businesses in the UK are also seeing above-average absence rates as Covid continues to affect the workforce. BCC research indicates that two-thirds of firms were affected by Covid absences in April, something that they believe free testing kits could help alleviate.
Haviland said:
“These are simple, straightforward measures that can be quickly reversed when the economy is in better shape.
The Treasury and HMRC have proven their ability during the pandemic to implement similar changes quickly and efficiently. Making these changes would have an immediate benefit for both businesses and the public.
The costs crises facing firms and people in the street are two sides of the same coin. If we can ease the pressure on businesses then they can keep a lid on the price rises being driven by surging energy bills, staff shortages and higher taxes.”
Peter Langham, Head of Operations at CloudAccountant.co.uk said:
“With rising energy, fuel, raw materials and labour costs, it’s getting more expensive to run a business.
If you’re worried about rising prices affecting your business, you should speak to an accountant to find out how they can help you survive and thrive in difficult trading conditions.”
For more information or advice, speak to a member of our accounting team today. Get in touch here or call: 0808 281 0303.