Govt urged to increase support for SMEs in 2017

Hampshire Trust says inflation is set to rise for businesses in 2017 owing to the weakness in the pound.

Mark Sismey-Durrant, Chief Executive Officer at Hampshire Trust Bank, says "the more challenging outlook for British businesses in 2017 could be helped by fiscal stimulus packages such as by reducing the corporation tax rate".

Sismey-Durrant continued: “The next 12 months will be dominated by global political events that could have a direct impact on UK markets. At the same time, the decision to leave the EU will play a part in increased economic uncertainty and could contribute to a slowdown in growth. Although the process of exiting the EU may take a while, in order to encourage business investment and boost business confidence, it is vital that the government share details as soon as possible. The longer businesses are left in the dark, the greater the impact could be.

“This is a time of tremendous opportunity but also unpredictability. As a specialist bank, we are committed to helping SMEs, the engine room of the UK economy, to secure the financing they need to grow.  In order to encourage SMEs to invest in their businesses in the year ahead, we need a context of increased certainty over the future political environment both in the UK and abroad.”

Hampshire Bank believes that SME housebuilders are key in helping to fill the housing gap, but have been let down by the traditional banks. It is urging the government to put a coherent housing policy in place, focusing on increasing the supply over the long term.   

It has also raised concerns over the impact of government policy on buy-to-let investors, and is urging the government to reconsider its approach.

Sismey-Durrant said: “Earlier this year, buy-to-let investors were impacted by the hike in stamp duty and the changes to the taxation of buy-to-let investments. Next year the sector faces further challenges with the Prudential Regulation Authority announcing new underwriting standards for the buy-to-let market. What remains to be seen is exactly how these new rules will be implemented by lenders, as there is some room for interpretation.

“We want clarity from the government to ensure that housing needs are met either through increased construction of houses or ensuring that the rented sector is affordable for future tenants. The government policy in this area seems contradictory.”

Finally, Hampshire Trust hope that business savers receive increased encouragement in the coming year.

Sismey-Durrant concluded: "Obviously the low interest environment has been challenging but there are plenty of reports emerging that the Bank of England may raise interest rates in 2017, which will be positive news for those looking to maximise the return on their savings."