Businesses have already been hit this year with the upcoming rise in corporation tax to 25%, announced in the March Budget, and the recent announcement of a rise in national insurance from April 2022 to help fund the health and social care sectors.
With changing tax policy placing an ever greater strain on business finances, the survey found that the policies the mid-market would most like to see introduced by government to support business growth are:
Measures to improve infrastructure (32%), incentives for employers to invest in skills attraction and development (31%), incentives to support low carbon business strategies (30%), measures to level up the UK economy with more devolved powers (30%), simplification of UK business tax systems (30%).
Changing tax policy, coupled with current supply chain issues, may also be impacting optimism levels in the mid-market. The survey finds that optimism levels have dropped across the board compared to the last Tracker in August, with a reduction in business’ revenue (-12pp) and profit (-18pp) expectations, and a reduction in optimism on the outlook of the UK economy (-9pp).
Dave Munton, head of UK markets and clients, Grant Thornton UK LLP, said: “The upcoming Autumn Budget requires a careful balancing act from the Chancellor. Business confidence is increasingly fragile and is a critical element to recovery but the market continues to face challenges.
“Businesses are currently batting a perfect storm of issues from supply chain disruption, rising tax burden, lack of talent, increasing energy prices and rising uncertainty as we move towards winter.”
He added: “To gain the confidence of UK businesses, the government will need to show that they are able to deliver both short term support and also long-term, flexible solutions that offer a clear path to, not just recovery, but also growth. As our research shows, businesses have long favoured a simplified UK tax system but, as the tax burden grows, we are yet to see any progress in this area.
“With COP26 on the horizon and the publication of the government’s Net Zero Strategy this week, it’s encouraging to see that policies around low carbon business strategies have risen in priority for the mid-market. We know from previous research that only 51% of mid-sized businesses have a net zero carbon strategy in place.”