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Cuts and VAT hikes not the answer for region’s SMEs

IN response to this week’s announcement that 1.6m jobs will be lost by spending cuts and VAT hikes, the region’s business leaders have said the news could be catastrophic for small businesses in the North East.

Reacting to The Chartered Institute of Personnel and Development on Tuesday, which predicted 725,000 public sector jobs are set to go, a TUC spokesperson believes some firms will not be able to cope.

Neil Foster, policy and campaigns officer at the Northern TUC said: The new figures show that the government’s savage spending cuts will cause a deep crisis for the private as well as the public sector.“

“With fewer people in work there will be less money to spend with local businesses creating a dangerous spiral of decline. Increasing VAT to 20% in January will have a devastating impact on small businesses at a time when they’re most vulnerable.”

I addition, the Tuc have said tax rises are more of a burden than a benefit, which could stall economic growth in the region.

Mr Foster, added: “The government needs an alternative approach built around jobs and enterprise growth. This is also an issue of fairness. The banks that have been bailed out need to get lending again to enable firms to grow and recruit more staff.”

He added: “ More workers mean more tax and a smaller benefits bill so that it is easier to cut the deficit and not services.“

The Treasury defended its spending cuts on Tueday, saying: “The independent Office for Budget Responsibility (OBR) has set out its forecast showing sustained economic growth in the years ahead, with employment rising and unemployment falling.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .