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06 October 2017

Use Budget to stop productivity rot, small firms urge Chancellor

Responding to the second consecutive quarterly fall in UK Labour productivity in Q2 2017, Mike Cherry, Federation of Small Businesses (FSB) National Chairman, said:

“It’s troubling to see sluggish productivity serving as such a persistent barrier to UK growth. The Chancellor must intervene to stop the productivity rot at the Autumn Budget.

“It’s particularly striking to see manufacturers, often touted as the great beneficiaries of a weakened pound post-Brexit, seeing such a marked fall in output per hour. No doubt spiralling input costs are starting to weigh on the sector. The introduction of export vouchers, simplification of R&D tax credits and expansion of the Small Business Research Initiative would provide a much-needed boost to the industry.

“More broadly, small firms need greater clarity about the future. More than seven in ten are not expecting to increase investment over the coming quarter. It’s hard to blame them when guarantees about a post-Brexit transition period and the future of EU workers have not been forthcoming.  

“We look forward to seeing the pieces for solving the productivity puzzle emerge in an ambitious industrial strategy that has small firms at its heart.

“In the meantime, with a record one in eight small firms expecting to close, sell or hand on their business, the Chancellor must steer clear of removing any of the entrepreneurial reliefs that serve as vital lifelines to our risk-takers. Equally, simplification, not expansion, of the tax regime at the Budget will be critical to boosting productivity in the long-term.”