Reported on Mon, 20 Mar 2006

The UK's small and medium-sized enterprises (SMEs) are struggling to cope with high levels of taxation, claims a business lobbying group, but a business loan could allow small firms to survive slumps in the UK economy.

The Confederation of British Industry (CBI), which represents 240,000 businesses and about one-third of the private sector's total workforce, has called on chancellor Gordon Brown to address the tax problems affecting small businesses.

The group claims that unless tax cuts are made in the forthcoming 2006 Budget, it could take two years for UK SMEs to experience sustained periods of business growth, with the economy set to struggle overall.

Ian McCafferty, chief economist at the CBI, explained that the predicted growth of businesses of 3.3 per cent over the next two years is a warning that Mr Brown can ill-afford to ignore.

"The Budget is the chancellor's opportunity to lift his foot a touch from the government's spending pedal and give the private sector the breathing space it needs to deliver stronger growth in the future."

Mr McCafferty revealed that the world economy is healthy enough to support the UK economy in the interim period, but emphasised that heavy taxation and excessive bureaucracy had contributed to the lowest levels of business investment in the country since the 1960s.

A low-rate business loan is one way for small firms to invest in new areas and make it through the predicted downturn in the economy unscathed.

© Adfero Ltd

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