SMEs say simpler tax system is top of government policy wish list

The survey asked SMEs which government policy they would change in order to make them more successful. The top three are:

  • A simplified tax system (87%)
  • Greater tax relief for exporters (81%)
  • Greater access to credit/finance (68%)

Confidence in the UK’s economic climate remains high at 84 per cent, which can be attributed to improving macroeconomic conditions in the last 12 to 18 months. Nearly 90 percent of SMEs believe the improvement in the domestic economy is sustainable, and feel it is encouraging to see that over half of business owners plan to increase investment in their company in the near future, a 10 per cent increase from the same period last year.

Export markets all eyes on China

UK SMEs are also more confident about international trade conditions, with 91 per cent of respondents feeling confident during the first quarter of 2015, compared to 87 per cent the previous quarter. This is reflected in the fact that now over a quarter of SME business revenue comes from exports, a 10 per cent rise from the previous quarter.

A fifth of UK SMEs now export to China, an increase from 15 per cent the previous quarter. Exports to Europe remain consistent, with 78 per cent of SMEs exporting to the Continent in the last 12 months. The research shows that sluggish Eurozone growth has led to more UK SMEs turning their gaze toward the Chinese and Indian markets. Over a third of UK SMEs said China has the greatest export market potential in the future, an increase from 25 per cent six months ago. British SMEs also are increasingly regarding India as a growing export market, possibly in line with the country’s economic advances; 10 per cent of SMEs believe India is the country with the biggest export opportunity, more than double the proportion from Q3 2014.

Commenting on the results, Tony Crivelli, UK Managing Director of Western Union Business Solutions, said: “Despite Inflation falling to zero, we cannot ignore the fact that Britain’s businesses are still faced with rising costs. Whilst previous surveys showed that SMEs were reluctant to pass on these costs to customers, the mood is beginning to change; one in five plan to increase their prices in an attempt to protect profit margins.

“SMEs are seeking new customers in the growth markets of China and India. Both of these markets represent two of the largest growing middle classes across the globe. Expanding into these markets is not without risk; SMEs would be wise to implement robust risk management strategies in order to manage exchange-rate volatility when sending or receiving international payments to remain competitive in the global market.”