Are regulations impacting your business finances?

UK businesses have expanded at their fastest pace in 11 months according to the S&P Global UK Composite PMI for the services and manufacturing sectors.

This week the FTSE 100 hit a record high, going above 8000 for the first time. It has been speculated this is due to an expectation of interest rate cuts and some alleged easing of geopolitical tensions.

NatWest says that SMEs had a strong first quarter with a rise in new business and the highest rate of output growth since last year.

Research commissioned by British Gas Businesses also found that small businesses have managed to save £450 on their energy bills over the last 12 months by implementing cost-cutting measures.

It’s all good news of course but, as ever, there is a “but”.

The regulatory cost burden on businesses has increased to £6 billion a year under the Conservatives, the party that has been promising to “cut red tape”.

Worryingly, the Centre for Policy Studies has warned that its figures were an underestimate due to “glaring flaws” in the regulatory regime.

Researchers at the Centre for Policy Studies (CPS) looked in-depth at 3,528 items of legislation from 2010 to 2019 to calculate the additional annual regulatory costs.

Impact assessments attached to more than 3,500 pieces of legislation over almost a decade have cost firms a gross £35bn a year – with £39.6bn in one-off costs – or up to £57.1bn, with £148bn in one-off costs, if pension reforms were included, the study found.

While businesses may be able to do something to reduce their overheads, such as energy consumption, payroll costs and sourcing of materials and services, regulatory costs are something they can’t escape.

According to a report in CityAM John Penrose, former government anti-corruption champion, added: “Every pound of red tape costs has the same effect on our economic growth, jobs and exports as a pound taken through tax. But governments of every stripe behave as though it is free.”

“Treating red tape costs as seriously as taxpayer-funded spending is long overdue.”

Has the cost of red tape impacted on your business finances?

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