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Small firms need the Budget to provide stability

Economic stability needs to be the keynote of the forthcoming Budget, the Federation of Small Businesses (FSB) has said.

The FSB claimed that the UK’s five million small businesses are best placed to help the economy expand and to pick up the slack as the public sector cuts take their full effect.

However, a consistent and stable economic background is essential for small firms to play their role.

Confidence and employment plans both fell among small businesses during the last quarter of 2010, and the FSB wants the Government to take specific actions in order to boost SME activity and to spur private sector recovery.

In its submission to the Chancellor ahead of the 23 March Budget, the FSB put forward the case for extending the National Insurance holiday for one year to existing businesses with less than four members of staff if they take on up to three new employees.

Plans to increase fuel duty from 1 April 2011 should be reversed, and a fuel duty stabiliser should be introduced to help to control inflation, the FSB added.

To tackle rising youth unemployment, the Government should provide finance for micro-businesses to enable them to offer places to apprentices and should extend the Graduate Internship Scheme, which is due to come to an end in March 2011.

Lastly, the Government needs to declare a moratorium on all new employment legislation for the 12 months following the Budget, allowing for a more predictable regulatory environment in which small firms can recruit staff, the FSB concluded.

John Walker, the FSB’s national chairman, said: “The Budget must provide economic stability and look to ways to nurture entrepreneurship and allow small firms to grow in order to create employment opportunities. With the downgrading of GDP in Q4 2010, it is clear that the economy is in a precarious position and small firms that lack confidence in the business environment will find growth risky. 

“The Government does have policies available to show small firms it is serious about supporting growth, such as extending the National Insurance holiday to existing businesses that take on new staff and keeping to its manifesto promise and introducing a fuel duty stabiliser.”