A survey by the Institute of Chartered Accountants in England and Wales (ICAEW) reveals that business confidence is set to fall in the next two years, with business expectations of investment showing a drop of 3.2 per cent in 2016 and 3.6 per cent in 2017.
The survey of 1,000 chartered accountants also shows that employment growth will drop 0.2 per cent in 2017, down from 1.6 per cent in 2016.
Commenting on the report, Stephen Ibbotson, ICAEW Director of Business, said: “The story of Marmite and PG Tips is just the beginning – retailers will be hit in 2017 and consumers will lose purchasing power as a result. Many households will be squeezed in 2017 due to a combination of inflation and sluggish wage growth.”
The Chancellor announced in the Autumn Statement that the government would focus on raising productivity to improve living standards for people across the UK. The new National Productivity Investment Fund will add £23 billion in high-value investment from 2017-18 to 2021-22 and the government will target this spending at areas that are critical for productivity: housing; research and development (R&D); and economic infrastructure.
Despite this pledge to raise productivity across the UK, the ICAEW does not feel this will impact its forecasts, with Mr Ibbotson adding: "Government needs to offer businesses incentives that will restore business confidence."
In this current economic climate, it is more important than ever that business owners look at ways of improving profitability, working capital and cashflow, enabling their businesses to be more agile and flexible to respond positively to the changing economic landscape.
At Beavis Morgan, we work with a wide range of businesses of all sizes and across many different business sectors, helping them with strategic planning, system implementation, business turnaround and improving business performance for the future. Our diverse team of tax professionals are also committed to ensuring that your tax reporting obligations are fully satisfied and that every opportunity to lawfully exploit tax savings is made known to you, restructuring your affairs in a tax effective and efficient way.
What’s more, if your business is undertaking research and development, such as on-going enhancement of existing products or services, you may qualify for cash back through the government R&D tax credit scheme. But don’t delay; with a two-year window to take advantage of these valuable tax relief opportunities, time may be running out for some!