VAT cut disappoints business - and so do banks

The results from over 400 businesses across the UK show deteriorating relationships with local bank managers, major disappointment with the Government’s VAT cut, and an increasingly pessimistic mood on turnover prospects – those are the findings of the British Chambers of Commerce latest Monthly Business Survey.

With cashflow a serious problem, over a quarter of businesses will be reducing working hours in the next three months.

The key findings include:

• 76 per cent of respondents felt that the VAT cut had been of no benefit to their business, while nearly a fifth claimed the cut had actually been a burden.

• 43 per cent of businesses expected their turnover to fall up to 50 per cent over the next three months.

• Less than half of respondents (45 per cent) stated that their local bank manager understood their business needs and tried to accommodate them.

• 28 per cent of businesses answered that they would be reducing working hours over the next three months.  

Steve Hughes, economic adviser to the BCC, said: The dangers facing the business community are plain to see in these results. Confidence in the economy is non-existent, and this requires an incisive response from government.

“Some of the government’s initiatives have been gratefully received, but the £12.5 billion VAT cut at the centre of the fiscal stimulus would clearly have been better spent elsewhere.