Tomorrow, George Osborne will announce the first Budget of 2016. With a looming referendum and world finances looking shaky, how will the contents of that red briefcase affect UK SME owners?

Revision of Growth Targets

The Office for Budget Responsibility (OBR) is expected to revise its growth targets downwards before the Budget is announced which will raise questions about whether Osborne will be able to reach his target of a £10.1bn budget surplus by 2019-20.

In terms of how this will affect businesses, admission that economic growth is slowing may have an impact on confidence. Osborne has already warned that the storm clouds are gathering in the global economy and has expressed a need for Britain to live within our means if we are to achieve long-term economic security.

Weaker company performance will result in weaker tax revenues, making the need for cuts ever more desperate. The shadow chancellor, John McDonnell, has not shied away from this opportunity to criticise Osbourne, claiming that: “Osborne’s short-term economics means Britain is deeper and deeper in hock to the rest of the world.”

This is a slightly catastrophised narrative, but it cannot be ignored that this decline in economic fortunes will harm the Conservative Party’s reputation. The Budget will allow Osborne to respond to the criticism that has been levelled at him that fortunes have worsened since the last budget in autumn.

The global economy has not been kind to George of late

Pension Reform

Once again, changes to pensions are on the agenda, with Osborne set to announce the outcomes of a study into tax relief.

Proposals to continue ‘tinkering’ with the system, that is already undergoing it’s largest reform in decades, have been met with criticism thus far, with Grant Thornton LLP urging the government to consider the impact this will have on employers.

In a recent press release, Chris Faulkner, Associate Director at Grant Thornton UK LLP, commented that, in their experience: “employees rarely make any decisions about their pensions, leaving it to their employers to determine their current contribution.”

With many SME owners already struggling to keep up to date with the changing rules and regulations surrounding the contributory pension scheme, further changes could result in an administrative nightmare.

Based on a survey of over 200 UK senior business executives, conducted by Grant Thornton, 70% of respondents agreed that constant changes are making pensions difficult for employees to understand. This could potentially cause issues for employers who have a responsibility towards helping their staff plan for the future.

Business Regulation

In a recent speech to the British Chambers of Commerce, Sajid Javid, Secretary of State for Business, Innovation and Skills, unveiled measures that will cut a further £10 billion of red tape.

Red tape is always an issue for businesses wanting to grow

In the speech, Javid claimed that this government “is delivering on its commitment to free firms from £10 billion of heavy-handed over-regulation” but it will be interesting to see if the Budget announcements confirm this.

In the speech, Javid claimed that he wants to “create the conditions in which all businesses can thrive” but this will only be possible if support and funds are made available.

It has now been over three months since it was announced that the Business Growth Service would be ‘wound down’, following a Spending Review settlement. It will be interesting to hear if Osborne has any replacements lined up, or any comment at all, about business support moving forward.

With a referendum looming, the next few months are set to be ones of uncertainty and insecurity for the UK economy and so it is of paramount importance that, on the 16th March, Osborne assures the nation that finances are in hand, that the storm will not arrive on UK shores and that plans are in place to ensure the survival of British businesses.