The Confederation of British Industry (CBI) has called on the Chancellor, George Osborne, to support growing small and medium-sized enterprises (SMEs) ahead of the Budget later this month.
The business lobby group said that the Government needed to help firms to access finance by boosting alternative sources of funding and encouraging more competition in the banking industry. It also called for help for SMEs struggling with high energy costs.
A spokesman for the group said that the UK’s “vibrant alternative finance market” must be nurtured and that the Government must encourage even more competition in banking so that businesses can access growth capital.
Arguing that equity financing could play an important role in helping UK businesses, the CBI said it would like to see an incentive introduced so that investors are encouraged to hold a stake for more than five years and suggested a relief on Capital Gains Tax (CGT), as well as making the Seed Enterprise Investment Scheme (SEIS) permanent.
As the CBI highlighted, many smaller firms say they would be more likely to use equity finance if the investment was longer-term, which is why the group is suggesting tax incentives to encourage this.
Other measures called for include the freezing of air passenger duty and making sure that the planned regulation of crowd-funding and peer-to-peer lending is proportionate.
The CBI also repeated its call for the Chancellor to freeze the carbon price floor, a tax on using fossil fuels to generate electricity, which it says makes the cost much higher in the UK compared with the rest of the EU.
According to the group, if growing businesses were helped in this way, they could invest in new equipment and sell more of their goods and services around the world, which would, in turn, help to rebalance the economy.
The Chancellor will deliver his 2014 Budget on March 19.