Uncertainty over Budget hits confidence among West Midlands small businesses

A new survey by the chamber showed business confidence had slumped since the general election in July, but was still higher than the national average.

They reported that uncertainty and speculation about the forthcoming Budget had stalled investment by most businesses, affecting forward planning and discouraging them from employing staff.

The survey found that 60 per cent of businesses in the Black Country expected their turnover to increase over the coming year, higher than the national figure of 56 per cent. But the survey also showed that confidence had fallen considerably since the previous one, carried out just before the election, when 71 per cent believed turnover would grow.

Half of the businesses which took part expected profitability to grow over the next 12 months, down from 62 per cent in the summer.

However, confidence is still higher than it was this time last year, when 55 per cent expected turnover to grow and just 45 per cent expected an increase in profit.

Taxation was the biggest concern for firms from all sectors across the region, with 31 per cent citing it as their main worry.

Mrs Moorhouse said: "Local companies have been adopting a 'wait and see' approach to investing ahead of the Budget.

"Speculation and uncertainty has delayed investment plans for most businesses, affecting the ability to forward plan, hire staff and get money moving instead of being sat in a bank account."

She said most employers were keen to improve the skills of their workforce, but smaller businesses found it difficult to provide the necessary mentoring to provide them with 'soft skills' in the workplace.

She said most businesses would have little choice but to pass on any increase in employers' National Insurance contributions to their workforces through reduced pay rises.

Mrs Moorhouse said businesses also wanted to know sooner rather than later about what Labour's plans were for changes to business rates. The party had pledged to make business rate reform a priority during the general election campaign.

"People want to know answers on business rates," she said.

"They want to see business rates reformed, but they worry what form those reforms will take."

Chamber members overwhelmingly thought that small- and medium-sized businesses should be exempted from any new taxes imposed in the Budget.

Seven in 10 viewed a cut in Corporation Tax as the most positive thing the Chancellor could do in the Budget, with extra support with training also seen as a priority.

"Small- and medium-sized enterprises don't have the staff to mentor new employees in the expectations of the workplace, and how to behave," said Mrs Moorhouse. "Support with teaching 'soft skills' would help."

She said businesses were keen to improve workforce skills, and said the Government needed to invest in local skills improvement plans and reform the growth-and-skills levy.