uk iconUK

Small businesses urge government to encourage innovation

Small businesses are urging the government to encourage new innovations through R&D, following the release of new figures that suggest that the state of productivity in the UK has shown zero growth.

Small businesses urge government to encourage innovation
smsfadviser logo

New figures released today by the ONS have revealed that in the three months to September 2019, the state of productivity in the UK showed zero growth.

Labour productivity for the third quarter of 2019 had no growth compared with the same period last year, while the growth of output per worker also stood at 0 per cent.

“Today’s figures just go to highlight the scale of the problem that the country has when it comes to productivity,” said Federation of Small Businesses (FSB) national chairman Mike Cherry.

He opined that months of uncertainty have done nothing to help small businesses that have been struggling under the weight of rising costs, soaring business rates and continued difficulties in the economy.

“It’s critical that the next government gives the economy a much-needed shot in the arm by investing in new infrastructure such as broadband and 5G networks, giving small firms the best tools available to flourish,” Mr Cherry noted.

“In order to increase productivity, it’s vital that we encourage new innovations through R&D. This can be done through making the tax credit system, as well as the Patent Box tax relief, more accessible to small firms who innovate, which would be a big step forwards as small businesses are likely to lack dedicated R&D and accounting departments.”

Also, this week the latest employment stats revealed a fall in employment across the UK by 58,000 last quarter.

Mr Cherry pointed out that hiring intentions among small businesses have dropped to a two-year low – nine in 10 are not planning to increase headcounts this quarter.

According to FSB, this is a direct result of spiralling employment costs.

“Between pension contributions, rising wages, and national insurance, it’s a real challenge for small businesses to make new hires,” said Mr Cherry.

“Greater assistance with managing these costs is needed if the next government wants to avoid a full blown surge in the unemployment rate.”

Subscribe to Financial Accountant

Receive the latest news, opinion and features directly to your inbox