VAT cut has had little impact on small businesses

According to the Federation of Small Businesses (FSB) the cut in VAT has not benefited small businesses at all as recent research conducted has found that 97 percent of firms polled stated the cut has had little or no impact at all.

The FSB has also indicated that only 8 percent of those surveyed said they are now able to take advantage of government funds as part of the guarantee scheme, so it seems as though action has not filtered down effectively to the grass roots.

The guarantee scheme works as the government guarantees 75 percent of the loan with only the remainder of the risk being taken by the banks.

Although the FSB survey has revealed that 53 percent of the companies surveyed were sceptical of the scheme, with the belief that it will have little influence in making the banks lend again.

The Treasury, on the other hand, has voiced their opinion that it is too early to be able to tell if the cut has actually been effective or not, however the FSB has stated that so far the action taken by the government to help stimulate the economy has not worked.

In calls for action the government may be better placed to use its meetings with banks to monitor the scheme and make sure to overlook and determine how it is used in order to safeguard the interest of small business, according to the FSB.

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