Hung parliament a big concern for small business

Small businesses are growing increasingly concerned over the prospect of a hung parliament as they feel it could have a severe impact on the UK economy.

The British Chambers of Commerce (BCC) have recently undertaken a survey that suggests that at least two-thirds of small businesses are concerned about what could happen if no political party is able to secure a working majority in the General Election on May 6th.

The BCC have suggested that these results are reflective of the growing unease among investors and small firms and the impact a hung parliament would have on Government decision making. Many economists believe that a lack of decisive action on how to reduce the public deficit could put the UK's economic recovery in jeapordy.

The Director General of the BCC, David Frost, stated that British businesses should be wary about the impact a coalition government could have on the economy.

He added:

“With our economy still fragile and the public finances in a dire state, the overwhelming concern is whether a hung parliament will provide decisive action around the UK’s unsustainable deficit.”

The BCC have suggested that many small businesses are still concerned about the increase in National Insurance Contributions (NIC) as they feel that this will be the most damaging tax hike. In contrast, 36% of small businesses believe that an increase in VAT would be an easier tax to bear than an NIC increase.

Commenting on this, David Frost stated that the results provide more evidence that the planned rise in NIC for 2011 needs to be completely abolished. He added:

“Considering companies have already said that VAT would be less damaging to their operation than a hike in NICs, it seems obvious that the tax on jobs should be scrapped and replaced by a less harmful tax on consumption.”

30/04/10