UK SMEs concerned about securing funding in run-up to Brexit, survey suggests

A survey conducted by insurer Hiscox has suggested that small and medium-sized enterprises (SMEs) in the UK are concerned about their ability to secure funding in the run-up to Brexit.

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Hiscox surveyed 500 small businesses and discovered that 38% of respondents utilise EU funding in order to help grow their business.

However, the insurer warned that firms face an ‘uncertain financial future’ as the UK re-evaluates its economic strategy ahead of Brexit.

36% of business owners cited a lack of funding options as being the biggest obstacle they face when looking for funding. 28% of firms surveyed stated that they are ineligible for funding, which has prevented them from growing their business.

Meanwhile, 25% said that market competition is their key challenge in securing funding.

Hiscox also found that economic uncertainty has adversely affected business confidence: 31% of those surveyed reported that such uncertainty has hampered their growth opportunities over the last five years.

IMF downgrades UK growth forecast for 2017

The International Monetary Fund (IMF) has downgraded the UK’s growth forecast for 2017 from 2% to 1.7%.

It attributed the downgrade to the UK’s weaker-than-expected economic performance in the first three months of this year.

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However, growth forecasts for France, Germany, Italy and Spain have been revised upwards.

The latest IMF forecast is just below the Bank of England’s: the Bank predicts that the UK economy will grow by 1.9% this year.

Meanwhile, UK growth forecasts for 2018 remain unchanged at 1.5%, the IMF revealed. Global economic predictions for next year also remain the same, with the IMF anticipating global growth of 3.6%.

Commenting on the downgrade, a Treasury spokesperson said: ‘This forecast underscores exactly why our plans to increase productivity and ensure we get the very best deal with the EU are vitally important.

‘We will continue to deliver greater prosperity and higher living standards for hard working people across the country.’

Business responds to Taylor Review of employment practices

Business groups have given their reactions to the recommendations of the Taylor Review into modern-day working practices, which sets out the key principles for providing ‘fair and decent work for all’.

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The review suggests that a national strategy is needed to help provide security in such areas as wages, quality of employment, education and training, working conditions, work life balance and the ability to progress at work.

One of the main areas of focus relates to the so-called ‘gig’ economy, with the report recommending the creation of a new category of worker, known as a ‘dependent contractor’, to provide additional rights and benefits for those who are currently classed as self-employed, but who work for firms which have a ‘controlling and supervisory’ relationship with their workers.

The additional benefits would include sick pay, holiday entitlement and the minimum wage, and the new employment status would also oblige such firms to pay millions of pounds in national insurance contributions.

The report also suggests that there should be no further increases to the non-wage costs of employing an individual, and called for an end to the cash-in-hand economy, with a move towards such fees being paid for via trackable platforms such as PayPal.

Business groups have given mixed reactions to the report’s findings, with many welcoming the focus on labour market flexibility, but also warning that some areas, including the plans to rewrite employment status tests, are a cause for concern.

However, the TUC warned that the review ‘is not the game-changer needed to end insecurity and exploitation at work’.

UK inflation rate rises to highest level in nearly four years

The UK’s inflation rate as measured by the Consumer Prices Index (CPI) rose to 2.9% in May, up from 2.7% in April, data published by the Office for National Statistics (ONS) has revealed.

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The rising costs of package holidays and imported computer games helped to push the rate to its current level. The ONS found that food and clothing prices also rose, but fuel prices fell.

Economists had previously predicted that the rate of inflation would remain at 2.7% in May.

Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), commented: ‘Higher inflation is a key business concern as it squeezes margins and weakens their ability to invest, particularly during this time of heightened political uncertainty.

‘A key focus of the new government must therefore be on easing the current pressure on firms’ cost base by tackling the burden of upfront costs and taxes associated with doing business in the UK.’

Meanwhile, the Trades Union Congress (TUC) expressed concerns that the UK’s rising inflation rate ‘continues to far outstrip wage growth’.

Frances O’Grady, General Secretary of the TUC, warned: ‘The election showed that working people are struggling. The new government must stop the real wage slide. Ministers must focus on delivering better-paid jobs all around the UK.’

Business groups react to General Election result

With the 2017 General Election resulting in a Hung Parliament, the UK’s leading business groups have been giving their reactions.

The Institute of Directors (IoD) has warned that businesses have now been ‘thrown into political limbo’.

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The Confederation of British Industry (CBI) is urging politicians to form a functioning government which offers security and places the economy at the heart of its agenda.

CBI Director-General Carolyn Fairbairn said:

‘For the next government, the need and opportunity to deliver an open, competitive and fair post-Brexit economy that works for everyone across all our nations and regions has never been more important.’

Meanwhile, the Federation of Small Businesses (FSB) has called for a delay to the beginning of Brexit talks.

FSB National Chairman Mike Cherry said:

‘It is important to go into the Brexit talks from a position of strength, focused on getting the best deal possible for trade and access to workers and skills. Negotiations should be led by a government and a Prime Minister that will be in place for the duration, and so we call for a delay to the scheduled start of negotiations rather than a rush to begin in 11 days’ time. The need for a transition period now becomes even stronger, providing the time to get Brexit right.’

The British Chambers of Commerce (BCC) also emphasised the ongoing uncertainty for business communities, and echoed the FSB‘s call for a delay to Brexit negotiations.

Dr Adam Marshall, BCC Director General, said:

‘Whilst companies have for many months done their best to screen out political noise in order to focus on their own operations, this result will prove much harder for UK businesses to ignore.

‘No business would walk into a negotiation without clear objectives, an agreed starting position, and a strong negotiating team. It is hard to see how Brexit negotiations could begin without answers on these important questions.’

‘Brexit funding gap’ poses threat to small businesses, report warns

In a new report, the Federation of Small Businesses (FSB) has warned that ‘billions of pounds in EU funding’ will need to be replaced following the UK’s departure from the EU if Britain is to avoid creating a ‘business support black hole’ for small firms.

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According to the report, the EU has dedicated £3.6 billion to the development of a competitive business environment for UK small businesses for the funding round set to end in 2020.

The FSB has suggested that, currently, there is ‘no regional development spend budgeted at national level beyond 2021’.

It is calling for the next government to seize the opportunity that Brexit presents to reform the business support landscape for small firms.

Mike Cherry, National Chairman of the FSB, stated: ‘Small businesses across the country are staring into a business support black hole from 2021. This is a particularly pressing issue for the many small firms with growth ambitions and those in less economically developed regions.

‘If the next government is serious about developing an Industrial Strategy that delivers prosperity across all areas of England, it must replace EU funding dedicated to small business support and access to finance after we leave the EU.’

UK workers set to experience fall in real wages, analysis suggests

UK workers are set to experience a fall in real wages in 2017 and 2018, according to an analysis published by the Trades Union Congress (TUC).

The analysis, which is based on forecasts from the Organisation for Economic Co-operation and Development (OECD), found that the UK will be one of just five OECD countries to experience a fall in real wages.

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UK real wages are on course to fall by -0.5% by the end of 2018. The business group found that, in other OECD countries, real wage growth is set to increase by an average of +2.6%.

Real wages for UK workers will be -6.8% lower in 2018 than they were in 2007 before the financial crash, the OECD has predicted.

The TUC is urging the next government to act in order to boost UK real wage growth.

Frances O’Grady, General Secretary of the TUC, commented: ‘British workers have endured the longest pay squeeze since Victorian times.

‘Britain badly needs a pay rise – and all the political parties must explain in their manifestos how they will boost living standards across the UK.’