Red Tape Continues Strangling the Economy

The £10 billion government has saved businesses over the past four years is a great start but if it doesn't do more to cut red tape for British SMEs, it's only a matter of time before we dip straight back into recession.

December saw George Osborne's final Autumn Statement before the 2015 General Election and it was used as a platform to showcase exactly how the Conservative Party would serve the country if successful in May.

Businesses will be pleased to see the Small Business Rate Relief being doubled for another year, while the £45 million investment supporting exports to Africa, South America and Asia will aid small businesses targeting growth beyond the UK.

It wasn't all positive though, despite 2014 being a record breaking year for start-ups, (a rise of more than 110 per cent) companies are left navigating the minefield that is red tape. This may be the first government in modern history to reduce domestic regulations for businesses, but much more still needs to be done.

The accountants' view

Research carried out at the last IRIS World roadshow revealed 67 per cent of financial professionals believe red tape is still restricting economic growth. When you consider a staggering 1,139 new laws have been imposed by the EU in the past year, it's hard to argue with them.

Small businesses should be at the heart of economic growth, yet the government continues to impose restrictions and regulations, hindering growth opportunities in the process. With small workforces come difficulties when legislation changes - many have seen businesses take swathes of additional time to manually amend areas such as accounts to keep up with the latest regulations.

Red tape doesn't affect me, does it?

There will of course be people reading this who believe excessive regulations don't affect them. In reality, it has the potential to impact us all.

For example, the latest figures show 1.96 million people in the UK are unemployed. If red tape hinders or prevents business growth, new employment opportunities will begin to dry up as companies invest in compliance rather than increasing their workforce. In turn, employment figures will begin increasing again and before we know it we're faced with another economic downturn.

At the other end of the spectrum, entrepreneurs who drive the UK's economic machine could in fact be put off investing in their new business idea. If anything could stop the next Lord Sugar from starting out on their own, it's the continuous stream of regulatory and legislative changes imposed by the Coalition Government. People often don't appreciate the value of successful entrepreneurs, despite the direct correlation between the amount of successful small businesses and economic growth. The more money brought into the country by start-ups, the quicker the economy will grow.

The time has come for action. The £10 billion government has saved businesses over the past four years is a great start but if it doesn't do more to cut red tape for British SMEs, it's only a matter of time before we dip straight back into recession.

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