Growth and employment plans for small and medium-sized businesses in Coventry and Warwickshire have been hit by the Autumn Budget – but the reduction in interest rates has made funding more attractive.
Those results are included in a snapshot of businesses who responded to a survey launched by Coventry and Warwickshire Growth Hub following Rachel Reeves’ first Budget as Chancellor.
There was a combination of companies from business and professional services, manufacturing and engineering, retail and trade, and tourism and leisure who responded to the Growth Hub’s online survey.
The survey revealed that around 80% of SMEs with a turnover of between £250,000 and £10 million think that the Autumn Budget will negatively affect their growth plans.
Concerningly, 41% of businesses surveyed said they were likely or very likely to reduce their headcount in light of the Budget announcements and 66% said they were likely or very likely to freeze recruitment. 65% of respondents, however, said they were unlikely or very unlikely to reduce staff hours and 35% are unlikely to reduce their headcount.
Most of those surveyed reported that they were unsure about the positive impacts of the Autumn Budget on their business environment, especially around innovation, investment, trading conditions, and planning and regulation
There were varying impacts reported on the estimated additional business costs per year from the changes to Employer’s National Insurance contributions, combined with changes to the National Living Wage, which ranged from zero to £250,000 per business.
Craig Humphrey, CEO of Coventry and Warwickshire Growth Hub, said the survey showed there is still a great deal of uncertainty among the SME business community in the sub-region.
He said: “We had an incredibly quick response to this request for feedback, illustrating the strength of feeling amongst our business base.
“The overall impact of the Budget in the survey showed that growth plans will slow down, as will the number of employees recruited by SMEs in Coventry and Warwickshire, and the general mood from those who responded was mixed.
“There are businesses who are looking forward to the anticipated reduction in interest rates making funding more attractive and feel the Budget has increased investment potential with the Government taking action to provide more investment in the Midlands.
“But for others it signalled a terrible Budget by discouraging start-ups and entrepreneurs, with the rise in employers’ National Insurance contributions and under-21s’ wages.”
He said businesses in Coventry and Warwickshire have had to be incredibly strong in recent years and the survey highlighted an array of thoughts for their plans over the next five years following the Budget.
“Some are remaining positive and are planning to re-invest their profits in their business but for others, it is difficult to plan strategically because of a lack of market stability,” Craig added.
“The overall impact of the Budget from those who responded was 71% of SMEs feeling it would negatively affect their future growth plans, which is the exact opposite of what we wanted the Budget to achieve.
“The Growth Hub is here to act as a sounding board as well as to provide advice for SMEs right across our area so if you are unsure how the measures announced in the Budget will affect you or if there is any support available, please get in touch with our team who have the expertise to help.”
CW Growth Hub’s account management team can be contacted on 0300 060 3747 or by visiting their website at www.cwgrowthhub.co.uk