Following yesterday’s news that UK SMEs have shown a lack of trust and familiarity with Philip Hammond, business owners and advisers are wondering how the Chancellor can inspire optimism for the economy and the UK’s business prospects.
Andy Hart, head of Investec Asset Finance says, ‘We welcome any sustainable effort to stimulate the economy but government policy alone will not keep UK businesses profitable. Companies, especially SMEs, must take a strategic view both of the investments they need to make to grow and the way they will finance those investments.
Many business leaders are not aware that the funding options available to them now go far beyond the traditional bank loan, Hart adds.
‘Businesses across the country in all industries use asset finance, for example, to help support their growth. This form of finance enables businesses to preserve working capital and reinvest money back in their business, while helping to manage cash flow with fixed periodic payments.
‘Helping SMEs be aware of all forms of funding matters just as much as what comes out of Westminster.’
A climate of confidence
Maria Krupinska, co-founder of Azimo, says it will be interesting to see how Philip Hammond will secure a climate of confidence again, after the uncertainty surrounding Britain’s exit from the European Union.
‘Access to the best talent in light of Brexit is mission critical; in our London office, 77 per cent of our employees are born outside of the UK and it is that multicultural and diverse workforce that makes our business thrive.
‘Fintech, in particular, is an industry close to my heart and has grown massively in the last ten years thanks for access to funding, great talent and a positive regulatory environment. It would be devastating to see all this hard work undone.’
Hampered by the cost of Brexit
Vince Mcloughlin, partner at business, tax, and advisory firm, Russell New says this is the first opportunity for the new chancellor to make his mark, but he is hampered by the cost of Brexit and the prospect of slower growth and higher inflation.
‘Should he cut VAT to support the post-referendum economy? Reducing VAT is a way of enhancing consumer spending. It could be a targeted cut at building works such as extensions and home improvements.
‘It is worth noting at this point that the UK currently faces restrictions from the EU over its ability to reduce VAT rates on certain goods and services such as domestic fuel and power. If the UK is no longer obliged to comply with the EU VAT Directive, the UK government could choose to amend the legislation to apply different rates to goods and services without constraint. But that is a way off yet!’