SMEs calling for VAT cuts and interest rate commitments

VAT cuts could encourage businesses to increase spending

New research by IT finance provider Syscap has revealed that two thirds of SMEs support the idea of a VAT cut.

It is commonly felt by SMEs that an easing of pressure on household and business budgets through a VAT cut would result in more consumer and business spending, and thus could potentially help the UK from avoiding a double dip recession.

The UK’s smaller businesses currently lack the negotiating power with suppliers to lower costs, and therefore cannot reduce prices to entice customers, so any sort of financial boost could free up money for business and consumer spending, boosting the UK economy as a whole.

The survey also revealed that 75% of SMEs would benefit if the Bank of England could commit to interest rates stability.

This could in turn give SMEs the confidence to be able to make judgements regarding future investments knowing exactly what is to happen to interest rates. Better judged and more appropriate decisions could then be made by SMEs.