Vanguard, one of the world’s most respected investment management companies, predicts that the UK economy is well-positioned for rapid growth next year.
Joe Davis, the company’s global chief economist, forecasts that growth will stem from increased consumer spending and interest rate cuts as inflationary pressures ease, irrespective of the general election outcome.
Although this growth is still some way off, it offers a glimmer of hope for SMEs grappling with immediate challenges.
Currently, SMEs are reportedly still struggling. Research from Premium Credit reveals that the cost-of-living crisis is increasing tax bill pressures on SMEs, with more than 430,000 firms currently struggling to pay money owed to HMRC. The research found that one in seven (14%) – over 750,000 firms – have found it challenging to pay a tax bill in the past ten years.
Meanwhile, Sarah Coles, head of personal finance at Hargreaves Lansdown, has warned of impending tax increases regardless of the election outcome. Additionally, Claire Madden, managing partner at Connection Capital, has cautioned that Labour’s potential increase in capital gains tax (CGT) rates could significantly impact small businesses, given that it has ruled out increasing income tax, VAT, and national insurance.
Clearly, the financial pain for SMEs is far from over, and it remains to be seen whether the predicted rise in consumer spending will materialise.
We reiterate our advice to keep a close and watchful eye on your business finances using our free cash management tool. Download it here.