Business rates reprieve for small businesses, but the outlook is still bleak.

In recent years, small businesses have faced a dual threat from both high business rates and the rise of online shopping.  According to the accounting firm PwC, a net 1,123 stores disappeared from Britain's top 500 high streets in the first six months of the year, an average of 14 shops a day. 

However, the UK Autumn budget announcement saw a positive move by the government to support small shops.  The Chancellor of the Exchequer announced that they will cut business rates bills by a third, for almost half a million small high street shops, in a total £1.5bn spending pledge.  This will mean that some of our smaller struggling retailers will have some hope for a reprieve. According to the treasury, the changes would mean a pub in Sheffield with a rateable value of £37,750 would be likely to save £6,178 next year.

The new business rates relief will however only be short-term and it is thought that it will only apply for 2019 and 2020.  But, in a focus on longer term support, the budget will also include a £650million transformation fund for local high streets, which will hopefully help to support infrastructure and transport access. 

Is this enough to help small businesses though?  The European Commission forecasts that the UK looks to have the weakest growth of all 28 EU countries, over the next 2 years.  They also warned that the risk of a chaotic Brexit means that the outlook could be even worse, with a large downside risk to the current numbers.  Increasingly weaker economic growth will be sure to make it harder for struggling small businesses. However, many UK SMEs have international clients, based outside of the UK, so should this really matter?  Unfortunately, the outlook for the rest of the EU is also bleak.  Real GDP across the whole of Europe is expected to decline over the next few years, with the European Commission blamed rising global uncertainty, Donald Trump’s trade wars and higher international oil prices.  Small businesses will need to stay as nimble as possible in order to ride out the imminent storm. 

Contact us at FI Capital to discuss how we can help to keep your cashflow fluid.