British businesses looking for growth opportunities in forthcoming budget

29 October 2018

  • A third (30 per cent) of businesses want Chancellor to freeze or lower business rates in Monday’s Budget

  • Further 14 per cent would like to see corporation tax eased to lowest rate of G7 nations

  • Seven per cent want the cap on Annual Investment Allowance raised to £1m in order to support growth

  • Clear regional variation with skills a highly ranked priority for firms in Wales (17 per cent), where it was the second most desired Government action

UK businesses want the Chancellor to use the Budget as an opportunity to create a better environment for business growth, according to new research from Lloyds Bank Commercial Banking. A survey of 1,200 firms asked what they would like to hear when the Chancellor lays out the Government’s spending plan for the next three years on Monday.

Nationally, the most popular answer, cited by 30 per cent of respondents, was to freeze or lower business rates, while 14 per cent want Philip Hammond to make a pledge for the UK to charge the lowest corporation tax rate in the G7 countries.

An increase in the Annual Investment Allowance cap for SMEs was the priority for seven per cent of businesses. Currently companies can claim tax relief on business equipment up to a value of £200,000. Those surveyed by Lloyds Bank hoped to see the cap increased to £1m to encourage investment and small business growth. While taxation was a clear focus for businesses across the country in their Budget wish lists, the survey also showed clear regional variations.

Regional picture

Regionally, the largest appetite for a freeze or fall in business rates was found in the South West (38 per cent) and North East (36 per cent), both regions that have experienced below average rates of gross value added growth in recent years.

While nationally nearly one in five businesses (19 per cent) said they hoped for an increase in Government investment in transport infrastructure, this was especially pronounced in the North West. Companies in the North West believe that transport infrastructure is as important as freezing or reducing on business rates (both 34 per cent), with firms eager for an update on the Northern Powerhouse project.

Whereas in Wales, a focus on skills was a highly ranked priority for firms, where it was the second most desired Government action (17 per cent), and Scotland (18 per cent), where it was third. Both home nations have below average rates of labour productivity which may explain the more pronounced desire for a stronger pipeline of skilled staff.

Sectoral picture

Among business sectors, action on business rates was the highest priority for wholesale and retail operators (40 per cent and 36 per cent respectively), as well as construction firms (35 per cent), while infrastructure investment topped the agenda for the transport industry (40 per cent).

Paul Gordon, Managing Director, SME & Mid Corporates at Lloyds Bank Commercial Banking, said: “UK businesses are experiencing a sustained period of uncertainty, therefore they are keen to see measures that will support them to pursue growth.

“While there are some regional variations, nationally there is consensus that any measures that ease taxation, increase financial incentives for investment among smaller firms or support with attracting and retaining the most skilled talent would go some way to support business in this challenging environment.”