British companies have rated pressure on profit margins and the increase in the top rate of VAT to 20% as the greatest threats to business growth, a new report has found.
The study by TheCityUK, the independent body promoting UK-wide financial and related professional services, found that 43% of respondents in a poll of decision-makers in 500 small and medium sized businesses saw reduced margins and profitability as an issue, with 17% seeing it as a key risk.
The rise in VAT concerned 39% of respondents, with 15% considering it as a major risk. Reduced cashflow was identified as a concern by 36%, although just 9% saw it as a main concern.
Chris Cummings, chief executive of TheCityUK, said: "There's no doubt that 2011 poses significant challenges for small businesses which are the backbone of the national economy and employ over 13 million people. While lending was an issue that grabbed the headlines, the real obstacles to growth now need to be addressed.”
The survey also revealed that the majority of entrepreneurs did not link cashflow concerns to the availability of bank lending, with 21% citing reduced lending availability as a potential problem and just 7% seeing it as their main concern.
Cummings added: "The banks have made a clear commitment to lend more to SMEs and create a £1.5bn growth capital fund to finance thousands of small and medium-sized businesses. The government has also made a welcome pledge to reduce corporation tax to the lowest rate in the G7.
“Business has pressing concerns that must be heard if the private sector is to create the jobs and opportunities needed to take up the challenge of generating real growth and make sure the UK remains globally competitive."
© Crimson Business Ltd. 2011