The UK’s Federation of Small Businesses has called for Chancellor Sajid Javid to propose an emergency budget to counter the threat of a no-deal Brexit.
The FSB, one of the largest business groups in Britain, said on Tuesday the Treasury must prepare as the pound continues to fall and a no-deal looms.
It demanded a blanket cut of employer national insurance contributions from 13.8% to 12%. The reduction in employer NICs would save businesses £11bn, which would help them mitigate the surge in staffing costs, the FSB claimed.
The group also recommended an uprating of the £3,000 employment allowance, an extension of the HMRC’s flexible payment plans and leniency reserved for firms in financial distress, to the wider small business community.
It argued that doing so will allow small firms time to prepare for potential changes to trading arrangements and economic conditions.
Other recommendations include reducing the VAT rate to 17.5% from 20%, increasing VAT turnover threshold and providing small businesses Brexit vouchers of £3,000 to assist with planning, accessing new markets, retraining staff and retooling.
The government has already set aside about £6bn for no-deal preparations, with £108m for supporting small businesses.
The FSB had previously recommended that the prime minister look to include a statutory sick pay rebate and a modernisation of business rates.
“With the UK set to leave the EU on 31 October, we need an emergency budget before Brexit happens. It’s time for this government to get serious about planning, and preparing the economy,” said Martin McTague, FSB’s policy and advocacy chairman.
He said ad campaigns and small measures focused on a few exporters won’t work.
“Cash is king for small firms, so we urgently need measures that will allow them to sure-up balance sheets, keep hiring, and help them prepare for an uncertain future.
“We’ve been dogged by disappointing economic growth for years … we need interventions on the domestic front. Making business rates fairer, supporting those struggling with employment costs, and investing in infrastructure would give small firms a new lease of life.”
Labour’s shadow minister for small businesses Bill Esterson told Yahoo Finance UK that “no-deal would cause our economy to plunge off a cliff and threaten the livelihoods of millions of small business owners and staff.”
He added the priority must be “to stop the disaster of no-deal.”
Best for Britain, a pro-EU group, said FSB’s call for emergency budget shows the “immense pressure” businesses are put under by Brexit.
Chief executive Naomi Smith told Yahoo Finance UK: “Despite Leave campaigners promising Brexit will be the end of bureaucracy, it’s clear that leaving the EU will tie-up businesses in red tape. Businesses around the country are warning they may have to relocate because of this disastrous process. It’s time to stop the rot.”
Yahoo Finance UK has approached the Treasury for a comment.
By Ben Gartside
Source: Yahoo News UK