Expansion plans at risk for mid-sized businesses
Expansion plans at risk for mid-sized businesses
- High operating costs and the cost of borrowing remain a top challenge for more than half (56%) of mid-sized business over the next six months
- One in two businesses say that expanding their business is a significant issue, as more than two fifths report challenges around accessing capital
- Ahead of the Spring Budget, businesses are calling for reform on skills policy, streamlining of taxes and better access to capital, with the majority (84%) believing the level of business tax will rise or stay the same between now and 2026.
The bi-monthly research, which surveys 500 leaders of mid-sized businesses (£10m-£300m turnover), reveals that over half (55%) say operating costs and the cost of borrowing is one of their top challenges over the next six months.
Delivering on plans to expand is also a significant issue for one in two mid-sized companies (50%) in the first half of this year. More than two fifths (41%) list sourcing new financing from private or public sources, such as bank loans and grants, as one of their immediate challenges.
Businesses are calling for reform on tax, skills and access to capital ahead of the Spring Budget
In the run-up to next month’s Budget, businesses are calling for changes to improve access to capital, reform taxes and address skills shortages.
Over a third (36%) want to see changes or policies to improve access to capital and government grants, such as enabling smaller banks to enter the market and encouraging pension funds to invest in non-listed businesses.
The same proportion (36%) want the Government to announce more support for resolving staff or skills shortages, including reforming the apprenticeship levy, introducing support for working parents and boosting high-quality apprenticeships. This number rises to more than two fifths (41%) in the manufacturing and hospitality and leisure sectors.
Businesses also want to see the Government prioritise more support around taxes. One in three (36%) want to see more resourcing in Government, specifically within HMRC and the Department for Business and Trade, whilst more than a quarter (26%) want long-term changes to streamline or lower business taxation, such as reform of business rates or a corporation tax cut.
Reflecting on what policies have worked well in the past, more than a third (37%) say the Chancellor’s ‘full expensing’ capital allowance has helped their business since the Autumn Statement made the measure permanent. This rises to over two fifths for businesses in the technology, media, real estate and construction sectors.
Amid calls for more support, businesses do not anticipate a corporation tax reduction in the near future, with the majority (84%) believing business taxes will remain the same or increase between now and the 2056-26 financial year. Almost a third (31%) believe it will rise further in that period.
Despite the challenging economic environment, mid-sized businesses remain ambitious. More than a third (36%) are prioritising expansion in the UK or internationally over the next six months. Even more (37%) are prioritising investing in their business. Key areas for investment include new or existing products or services to increase revenues, as well as new technologies, such as AI or automation.
Richard Austin, Partner at BDO, said:
“Next month’s Budget is the Government’s last chance to lay out its plans before the General Election.
“Mid-sized businesses are acutely aware of the challenging economic climate and aren’t looking for widespread tax cuts to help fund their growth. However, clear and targeted improvements in the tax system, coupled with better support around skill shortages and improved access to capital, could provide a real turning point for businesses that are struggling to grow.
“Generating revenues of over £1tn and providing one in four jobs, the UK’s mid market should not be overlooked. With the right policies and targeted support, these businesses will be the driving force behind the UK’s economic recovery.”
ENDS
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