The spring budget 2021 – laying the foundations for UK economic progress & productivity

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This afternoon Rishi Sunak announced continued largescale support for UK SMEs due to the ongoing impacts and disruption caused by COVID-19. Paul Struthers, Managing Director of Sage, had the following to say.

“This was a strong Budget for both SMEs and the wider levelling up agenda. This economic recovery will be a marathon and not a sprint. We welcome the short term relief that will come from extensions to Furlough and Business Rates. Help to Grow also provides a fantastic platform to encourage SMEs to invest for growth in the future. However, Super Deduction does not incentivise investment in technology and digital tools, and presents a missed opportunity for the small business community – who we know, want to invest but can’t.

“Today’s Budget is not about 2021 or the next parliamentary term, but about laying the foundations for the next decade of UK economic progress and productivity. SMEs created 73% of net new jobs after the last recession, with the right support, they will do the same again. We now have a once in a generation opportunity build consumer confidence, underpinned by a digital led recovery, equipping the UK’s 5.9million SMEs for growth.”

 

  • On Furlough:

“The extension of furlough will provide another much-needed lifeline for many of the UK’s 5.9 million SMEs and will avoid the inevitable redundancy time-bomb that would have been created had it ended later this month. The focus should now be on how to create confidence for growth so that jobs can return, and businesses can thrive. The Help to Grow scheme is the innovative approach we’ve been calling for. Two-thirds of businesses want to invest in technology but until now 60% have not been able to do so. Providing support to SMEs to invest in their futures will stimulate growth and job creation for the long term.”

 

  • On Help to Grow: 

“Help to Grow is a major first step towards a much-needed longer-term approach to supporting smaller businesses scaling up digital adoption. It is good news for the UK’s economic growth, productivity puzzle and job creation. Our research shows that realising the current appetite for technology investment in full could benefit economic output to the tune of £145 billion, supporting 2.7 million jobs nationwide. As consistent and long-time supporters of technology incentives, we welcome the recognition that technology will play a key role in an SME-led recovery.”

 

  • On Super Deduction:

“We are standing on a brink of a potentially huge turning point towards a digital economy. Whilst the “super deduction” is a bold policy, it presents a massive missed opportunity to empower a digitally-led recovery. The scheme incentivises investment in physical assets like plant and machinery, but excludes investment in technology. We know that two-thirds of SMEs want to invest in technology, but 60% don’t have the funds to do so right now. This seems counterintuitive in an age where digital needs to be front and centre of every business – and in a country like the UK where the vast majority of businesses are service-based.”

 

  • On North East:

“As a FTSE company proudly head-quartered in the North East, we are delighted that the Government has had an eureka moment and realised the vast potential this region has for playing a key part in a swifter and sustained economic recovery. Today’s Budget has confirmed what we’ve always known; the region is an innovation hub, with massive potential for high growth with the right investment, with its highly skilled workforce and strong trade links. The news of a Free Port in Teesside and the new Darlington home of the Treasury North hub will firmly contribute towards the Government’s levelling up agenda.”

 

  • On Free Ports:

“Our research shows that SME trade has the potential to generate £290 billion annual revenue for the UK. Unlocking just 10% of this potential could add £29 billion per year to export revenues, supporting around 215,000 direct jobs and 50,000 additional jobs in the professional and scientific sectors alone. We welcome today’s announcement of free ports as an important first step in giving SMEs the confidence to trade back to prosperity. To ensure the opportunity they afford is accessible to businesses of all sizes we also reissue our call to Government to introduce a new SME Trader Support Service, which will support SMEs’ appetite to trade and build business confidence to export.”

 

  • On Self Employed Income Support Scheme (SEISS):

“We welcome the extension of the SEISS and the widening of the scheme to include more of those entrepreneurs impacted by the pandemic. This will provide relief to a significant number of them who will continue to face challenges in the months ahead.

 

“During Covid, there is a new generation of entrepreneurs who have emerged, with 50% of micro business founded in the last year coming up with the business idea during lockdown. Beyond the immediate need for their financial support, the government must consider innovate policy that champions these drivers within our economy into the long-term. This means taking action to support people to take the leap and start a business, and backing entrepreneurs with schemes like Help to Grow, helping them to invest for growth and flourish as the economy rebuilds.”