Rathbones has urged the Government to use the Autumn Budget to strengthen support for entrepreneurs and smaller businesses, warning that confidence has slipped and investment could stall without targeted reforms.
The firm argued that extending 100% capital allowances to all forms of business investment could add between £15bn and £60bn to UK GDP, representing a long-term uplift of 0.6% to 2%.
In its report ‘Building prosperity: Five ways to drive growth and investment in the UK’, Rathbones called for more generous incentives covering buildings, software and R&D, and for a reformed business rates system that avoids penalising firms for upgrading their premises.
Oliver Jones, head of asset allocation at Rathbones and author of the report, said: “As a firm representing business owners and entrepreneurs, we know how policy reform can shape business success.
“To make the UK the best place to start and grow a business, extending capital allowances and reforming business taxation are essential.
“More generous incentives for investment – covering buildings, software, and R&D – would encourage firms to invest and help the UK compete with international rivals, like the US which introduced similar measures earlier this year.
“While these reforms may reduce tax revenue initially, they would drive growth and strengthen the UK’s global competitiveness.”
New polling of over 1,000 founders, owners and senior executives revealed that 37% feel less confident than a year ago, with sentiment weakest in hospitality/leisure and healthcare/life sciences.
Despite this, nearly a third planned to invest in new products, markets or services over the next 12 months.
The support SMEs said they most need includes government tax breaks (51%), financial support (39%) and digital transformation (30%).
Almost half of SMEs (46%) said they expect the upcoming Budget to be bad for business, while 70% feared tax rises and 62% felt the Government does not understand their needs.
Many said they are preparing for difficult decisions, with 37% planning cost reductions, 28% preparing to freeze hiring and 26% ready to delay investment if the Budget disappoints.
Ade Babatunde, senior financial planning director at Rathbones, said: “These findings reflect what we hear from clients and highlight a real sense of uncertainty ahead of the Budget.
“Business-friendly policies are essential to restore confidence and drive growth, ensuring the UK remains a dynamic place to start and grow a business.”
