The government must not sacrifice its support for small businesses as part of widely-anticipated spending cuts to plug the gap in public finances, the Forum of Private Business (FPB) is warning.

The forecast for public sector net borrowing by the end of 2009 is £185 billion, meaning substantial spending cuts will be required in order to plug the gap.

In view of this, the FPB has submitted its proposals for ‘responsible growth’ ahead of the Pre-Budget Report, which is expected to take place in November. Measures include improving existing support schemes, reducing small firms’ corporation tax, tax incentives for micro-businesses recruiting staff and introducing a comprehensive regulatory review.

“Despite recent suggestions that the economy is heading out of the woods, it is clear there is still a difficult road ahead. Government cuts should not include those programmes that are making a real difference for struggling firms,” says the FPB’s policy representative, Matt Goodman. “The next 18 months will be crucial. As the main drivers of growth, small businesses need to be placed at the heart of plans for economic recovery so they can make the most of future opportunities.”

 The FPB is concerned that support programmes such as the enterprise finance guarantee, and the enterprise insurance (TCI) top-up scheme, both of which have been extended recently, could be cut back in the name of fiscal responsibility.

The FPB is arguing that with the existing EFG scheme set to expire in March 2010, priority should be given to a successor to it. 

newsResearch carried out by the FPB shows that confidence among small businesses is high, but tempered by fears over finance and cash flow.

The FPB’s latest quarterly Referendum survey, entitled ‘Preparing for Growth found that almost half of respondents (47%) expect to see an increase in trade over the next year, with 37% intending to take on staff by September 2010.