A leading small business pressure group has called on the Government to consider implementing VAT cuts following a significant fall in the FSB’s quarterly index, which measures business confidence.
The ‘Voice of Small Business’ index shows that confidence is lower in the second quarter of the year than it was at the start of the year. Of the 18 sectors monitored, 13 currently show no signs of business confidence, and 5 sectors have slipped from a ‘positive’ to a ‘negative’ reading.
The FSB has called on the Government to follow the lead of other EU nations and slash VAT in the tourism and construction areas to 5% for a year to help boost the economy. These two sectors of the economy have fared particularly badly in the confidence Index.
The small business group says that it is extremely worried that the Government’s growth plan is failing and the promises to help small businesses grow have yet to materialise.
By targeting VAT cuts in construction and tourism, the FSB believes that small firms will be able to drive job creation and boost consumer spending – something the Government’s growth plan has so far failed to do.
Evidence from other EU countries suggests that any lost revenue to the Exchequer by making VAT cuts will be met by earnings from additional demand, jobs and the wider economic activity.
Commenting on the latest Index figures, John Walker, National Chairman of the group said:
“Since the start of 2010, the FSB Index has proved to be a good barometer of the path that economic growth will take, so the news that it has fallen back to almost zero paints a very worrying picture for GDP.
“We now need the Government’s actions to match its rhetoric, and it must finally deliver on actions in its growth strategy. We must see a cut in VAT to five per cent in the construction and tourism sectors to boost consumer demand. It is tangible measures like this that will actually help small businesses to be able to grow their businesses and grow the economy.”
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