The Confederation of British Industry (CBI) has called on chancellor George Osborne to use his final pre-election budget to support UK mid-market firms looking for growth opportunities.
The CBI’s proposals include making the Annual Investment Allowance (AIA) permanent from 2016. It argues that setting it at a long-term rate of £250,000 will provide stability that will in turn promote investment. The industry body projects that this will cost £670 million in 2016/17 – before rising to £754 million by 2019/20.
It also proposes boosting the availability of long-term growth capital. By implementing measures included in the CBI’s Financing Our Future Economy it is claimed £15 billion of capital can be unlocked.
CBI director-general John Cridland commented that, even though the recovery is starting to show tangible benefits to the economy, “we still need a budget that locks-in the successes from this Parliament and spends funds wisely on those areas which will keep growth on track”.
>See also: How to close the skills gap and propel small business growth
“This is a good opportunity for the chancellor before the election to support growth and investment well beyond the election, providing stability, certainty and simplicity for the UK’s ‘Mittelstand’ to get themselves on the front foot,” he continued.
“So the chancellor must reward growing, ambitious firms with the tools to get on with the job of rebalancing the economy and lift productivity. There has been good progress on this front from the government, and the chancellor can now take further action to boost investment and innovation.”
The CBI’s proposals come as a wide-ranging report by Oxford Economics and HSBC suggests the UK’s mid-market manufacturing and services sectors are now contributing more to the economy than Germany’s Mittelstand firms.
The research reveals that the firms in the UK with a turnover of more than $50 million but less than $500 account for 17.2% of economic activity in the UK. In Germany the figure stands at 16.3%.
HSBC’s UK head of corporate banking Amanda Murphy told The Guardian the UK’s mid-market companies businesses “display huge diversity across the country”.
“But among the characteristics that unite them are the advantages offered by their scale – they tend to be more productive than small businesses, while also being more nimble and innovative than the largest firms. For that reason, it’s vital that all of us – from banks to [the] government – do more to understand and meet the specific needs of the sector,” she added.
Further reading on growth: Africa offers ‘huge opportunities’ for growth
