An independent report, carried out by the Centre for Economics and Business Research (CEBR) on behalf of the FSB, shows that increasing the burden of taxation on the country’s small businesses – which make up 99% of all UK businesses – would plunge the economy further into debt and take its toll in jobs at a time of spiralling unemployment.

The CEBR report calculates that the 0.5% increase in National Insurance contributions, planned for April 2011, would cost the economy 57,000 jobs but only make a small dent in the gap in the public finances. In addition, these job losses alone would cost the Treasury around £900m in additional jobseekers allowance and other benefits.

The FSB is urging Chancellor Alistair Darling ahead of his pre-Budget report to keep employers’ NICs on hold, so giving SMEs the chance to create additional jobs. This, the FSB said, would represent a vital step towards making it easier for the UK’s 4.8 million small businesses to employ staff and to drive the economy out of recession.