Catch up on the big issues with our weekly Small Business Bites. We cut through the noise to dig out the week’s stories that really matter to the UK’s small business owners. Here’s our roundup of things you need to know:
Brexit
No surprises here – five days into August and Brexit is still dominating the news. According to The Confederation of British Industry’s (CBI) latest quarterly SME trends survey, the UK’s small and medium-sized manufacturers saw a rise in production in the three months to July, but business optimism fell sharply amid ongoing uncertainty around Brexit.
The survey of 472 firms found that investment intention in buildings, planting and machinery have been scaled back, although manufacturers intend to increase spending on product innovation and training for staff over the next 12 months.
CBI director of Economics Rain Newton-Smith said: “Naturally, much of the concern is related to uncertainty and business wants to now see the new Government deliver a clear plan and timetable for the EU negotiations ahead, while cracking on with immediate domestic priorities, including a decision on new aviation capacity in the South East, which will help the UK’s SME manufacturers to reach new markets in the future.”
In other news, the Prime Minister held a roundtable meeting of SMEs and trade associations in Downing Street on Thursday. Attendees included The Federation of Small Businesses (FSB), British Chambers of Commerce and The Association of Independent Professionals and the Self-Employed. Theresa May placed high importance on engaging with small businesses when delivering new Government priorities, and said she will be asking for their views on the negotiations to the exit of the European Union.
Late payments
The SME Confidence Tracker report for Q2 2016 – undertaken by Bibby Financial Services before the EU referendum – found that more than a quarter (27%) of small businesses have written off money due to late payment in the last year. Read more on the story here.
Company Check recently asked 500 business leaders about their experience of financial risk, and found similar results. 53% of respondents have had to write of bad debts in the past, and 63% said they do not insure themselves against financial risk should things go wrong. The full survey results can be found at http://hub-new.companycheck.co.uk/financial-risk.
Dividend pay-outs
New research by accountancy firm Moore Stephens found that UK SME owners chose to pay out 94% of their profits to their shareholders in 2015-2016. This is up from 63% the year before.
The company said the increase was due to recent changes to the taxation of dividends, announced in July 2015 and introduced in April 2016 by the former chancellor George Osborne. Dividend tax rose from 0% to 7.5% for basic rate taxpayers, 25% to 32.5% for higher rate taxpayers and 30.56% to 38.1% for additional rate taxpayers.
Interest rates
On Thursday, The Bank of England announced that it has cut interest rates for the first time in seven years to a historic low of 0.25%. The rates were cut from 0.5%, and the Bank signalled that rates could go lower if the economy worsens.
Company Check’s operations director Chloe Webber spoke to The Business Desk about the changes. She said: “The cut’s no surprise given all of the indications we had that it was on its way. The big news is the fact that market uncertainty was deemed so potentially damaging to the economy that we’ve now got the first cut since 2009. 0.25% is a historic low and there’s no doubt in my mind that it will encourage firms to spend rather than save. It could be a shrewd move by the Bank of England; which has acted swiftly so far to allay any Brexit fears. Investment equals growth and a return to confidence, or at least that’s what we’re all banking on.”
In other news
- Company Check’s annual Business Census will launch this autumn, asking thousands of businesses for their views and predictions for 2017 – sign up to our newsletter below to keep informed about when it launches.
