Partner Article

Government must do more to increase business confidence

New research has shown that the Government is wasting vital opportunities to increase confidence amongst investors which could speed up economic growth.

According to the QCA/BDO Small & Mid-Cap Sentiment Index, small and mid-cap companies believe that reforms are needed to encourage shareholders to adopt a longer-term approach to investment.

Changes suggested involve including AIM and PLUS-quotes shares in ISAs and the abolition of stamp duty.

85% of small and mid-cap companies believe that these changes would have a positive impact on their business, of which over a quarter see the inclusion of AIM and PLUS-quoted shares as the single biggest change that would be of benefit.

Many now hope that these changes will be implemented by the Government on the 21st March, despite rejection of the proposals by the Treasury last month.

The research was compiled by business advisers BDO LLP and the Quoted Companies Alliance. Scott Knight, partner at BDO LLP believes that the forthcoming budget is an opportunity for reforms which will help small and mid-cap companies, but is concerned that policymakers will not respond to the needs of the business community

He commented: “The early signs are that policymakers are engaged in rhetoric – asking questions and not listening to the answers.

“This leaves small and mid-cap companies hamstrung by a one-size-fits-all approach that hinders their growth prospects and hampers investment; not what businesses in the UK need at the moment.

“The needs of small and mid-cap companies differ from those of large businesses and the Government must recognise as much in the upcoming Chancellor’s Budget.”

Businesses have also made calls for reforms to capital gains tax, which they believe will also improve their growth prospects.

Over 80% of small and mid-cap quoted companies believe that extending capital gains tax relief to long-term investors that hold shares in SMEs for five years would have a positive impact on small and mid-cap companies.

Tim Ward, Quoted Companies Alliance CEO, believes that any further delays in stimulating growth could stall the economic recovery by several more years.

He continued: “Including AIM and PLUS-quoted company shares in ISAs, abolishing of Stamp Duty and reforming capital gains tax relief are all measures that the Quoted Companies Alliance has proposed to the Chancellor.

“They are easy to implement and overwhelmingly supported by small and mid-caps and tie in to the much vaunted need for long-term investment and recognise the importance and potential of small and mid-cap companies as the driver of economic growth.

“Now is the time to support small and mid-cap companies as the engines of growth with a range of Budget initiatives designed to lubricate and fuel their financing and business growth plans. The Government must stop consulting and start to deliver.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .