This week, we launched our pre-Budget Entrepreneurs Survey. I won’t sugarcoat things: the findings make for brutal reading. (Though do read on for a silver lining.)
To be clear from the start, this survey reflects the views of some of the UK’s most ambitious founders – not freelancers, CEOs parachuted into existing firms, or survey-panel participants posing as entrepreneurs. These are the people building significant companies from the ground up. This is where innovation, jobs and productivity come from, so their views matter.
Eighty-five per cent of respondents think the Government doesn’t understand the needs of entrepreneurs, while only 3% think it does. Seventy-nine per cent say life as an entrepreneur has become harder since they started; just 6% say it has become easier.
Following the first Labour Budget, we know that over half of entrepreneurs surveyed reduced their growth expectations and nearly as many paused hiring. A third cut headcount, and a third reduced investment in R&D.
Even more concerning, six in ten founders know at least one entrepreneur who has sold their business or left the UK because of changes made to capital gains taxes. Seven in ten know at least one who is planning to leave due to the current or expected tax regime. A striking 88% of founders view current UK taxation negatively, and 72% say the same about regulation – both an increase on June’s survey.
With the next Budget less than a few weeks away, 88% expect taxes to rise, and 82% expect the Budget to be bad for the entrepreneurial community at large. A fifth of founders surveyed plan to sell their business, and over a quarter plan to leave the UK. Something has to give. As our Research Director and number-cruncher Eamonn Ives was quoted by City A.M. as saying:
“Our polling shows that years of repeated tax hikes are now taking their toll. The UK can’t hope to outcompete tax havens, but we can be smarter about how we raise money to fund public services.”
“None of the Above” remains the most common answer to the question of which political party founders told us best understands entrepreneurs, though the Conservatives and Reform have made modest gains at the expense of Labour and the Liberal Democrats since our last survey. Among those expressing a preference, if a General Election were held tomorrow, 18% would vote Conservative, 16% Liberal Democrat, 15% Reform and 10% Labour.
I promised you a silver lining.
First, despite everything above, many of these same founders plan to increase headcount, R&D spending, exporting, expand internationally and seek new investment over the next 12 months.
Second, founders who would still encourage someone to start a business in the UK outnumber those who would not by a ratio of two to one.
And finally, we can only run this survey because there are founders who are as ambitious for the UK as they are for their own businesses (thank you to those of you who took part).
We don’t underestimate the challenge of balancing the books. Entrepreneurs aren’t asking for miracles – just a sense that things are moving in the right direction. It’s time to turn a corner.
If you want to join us in dissecting the next Budget, request a place to join us on 10 December at Home Grown for a panel discussion with Partners Wealth Management (PWM).
On the Uptake
Here’s another dose of optimism. Three quarters of entrepreneurs are positive about the impact AI will have on their business, with just 3% pessimistic. The main things holding them back from increasing their use of AI in their businesses are security or privacy concerns and accuracy or mistakes, although nearly a third haven’t found any barriers.
And while it’s leading to fewer hires for some, it is far from clear that it’s going to cause a spike in unemployment. For that, look at our findings on the much-maligned Employment Rights Bill. Among those aware of its implications, most think it will have a negative impact on the economy.
Coining it in
We’re delving into the policy details of stablecoins and would welcome input from experts – particularly in finance, law or Parliament. If you or your organisation has insights to share, get in touch.
Laid Plans
Fidelity International is launching major research on the retirement savings crisis facing UK entrepreneurs. They’re looking for founders willing to be case studies for the national press – offering a short quote for the media release and, if comfortable, speaking with a national journalist. You can reach out to Fidelity via email here.