Today small sized businesses will come to learn whether the Federation of Small Businesses has done enough to secure a more comfortable future few months for those struggling under the current financial pressure.

Small businesses are hoping to get some relief today through slashes in VAT, help with national insurance contributions and aid with income tax in the pre-budget report.  Chancellor Alistair Darling has announced that todays pre-budget report will be able to provide some much needed relief from the current financial downturn.  However, a poll taken by Baker Tilly discovered that 63% of the businesses felt that the pre-budget report would actually take levels of interest higher.

Tax partner at Baker Tilly in Liverpool, Andrew Lloyd said, “Though this is arguably the most important budget announcement for a generation, expectations about its effectiveness among the business community are very low…In recent years, we have seen tax cuts paid for by tax increases elsewhere…It seems people expect this PBR to be no different.”

However, speaking at the CBI (Confederation of British Industry) this morning, Prime Minister Gordon Brown stated that standing by and doing nothing to aid the financial woes of the economy was not the planned course of action and even the thought of such neglegence was clearly not a way out.

Brown said, “Doing nothing for the economy is not an option. We will show that we are moving from providing liquidity to the banks to ensuring that small businesses that depend on the flow of funds from banks get the proper answers they need.”

“Small businesses, cash flow and other areas in which small businesses feel that more can be done, I believe that you will find this afternoon [in the Pre-Budget report] that action has been taken.”

“Small companies paying vat, national insurance, income tax, a system has been put in place to help these companies.”

Last Thursday, the Treasury released figures showing that the budget deficit had more than doubled between April and October 2007 and 2008, from 9.5 billion pounds the year before to a huge 23.3 billion pounds for 2008.  Economists have declared that they believe that we will see the budget deficit will make up a staggering 6.5 per cent of the total annual economic output for 2009.

However, Gordon Brown has addressed such worries, stating that a new approach to macro-economic policies was required to pull the country through the financial recession.  Brown said, “Our national debt is lower than all G7 countries except Canada, so there is scope for the government to increase borrowing at the right time to support the economy.”

Brown also discussed how the UK was to become president of the G20 from January 1st, 2009 and that he is planning on working closely with European trading partners to come to an agreed economic policy, saying “From next year I hope to see coordinated action from the US and our European partners, but EU action we could see later this week.”

There is also speculation that the  pre-budget report will cut VAT from a heft 17.5 per cent to a more manageable 15 per cent which owners of small businesses should find a slightly helpful aid.  However, as Gordon Brown has recently said, a tax cut now will mean heftier tax raises in the future.

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