Glimmer of hope in economic forecast

I WELCOME the positive strides made for SMEs in this week’s spring Budget.

The increase in the VAT registration threshold to £90,000 from £85,000 and the extension of the Recovery Loan Scheme for an additional two years are particularly noteworthy, and something I’d wished for from the announcement, following conversations with Cornwall Innovation customers.

The rebranding of the extended loan scheme as the Growth Guarantee Scheme, with 70% of the loan value underwritten by the UK Government, provides an attractive financing option for businesses looking to invest in assets or improve cash flow.

However, it’s evident that the overall reaction from SMEs to the Chancellor’s Budget has been lukewarm, with many expressing the sentiment that Jeremy Hunt’s measures fall short of making any substantial impact in the short to medium term.

The 2% reduction in national insurance payments for the selfemployed, while welcome, doesn’t address some of the more pressing challenges faced by SMEs, such as late payments, cash flow issues, wage inflation and the limited access to affordable finance.

On a broader economic scale, there is a glimmer of hope derived from the Chancellor’s optimistic economic forecast for the UK. The anticipated fall in inflation from

4% to 2.2% and the corresponding cut in interest rates from 5.25% to 4.2% by the end of 2024 may offer SMEs, in particular, a more favourable business landscape with cheaper access to finance and more affordable wage demands in the medium to longer term, assuming these forecasts materialise.

Matt Harrington Head of Cornwall Innovation

Centres