Just over a week, of course, until the Chancellor Rachel Reeves will unveil her Spring Statement, which is expected to announce further spending cuts to keep the deficit and borrowing under control. This is many UK businesses are facing tax rises when an increase in employers National Insurance comes into force next month. Small businesses then, of course key to drive in the economic growth the government so desperately wants and needs. So what would help them? What is the prescription?
The latest report from Goldman Sachs, built on their ten thousand small Businesses program, contains some key recommendations. Joining us to discuss is a Sahu Pompei, Global head of Corporate Engagement at Goldman Sachs and President of the Goldman sax Foundation. Sahi, thanks for joining us in the studio. What is the sentiment right now amongst the small businesses that Goldman engages with across the UK.
It's a combination of things, I'd say, I think it's sort of three emotions they're having. There's a fair amount of optimism about the environment and the road ahead. They're concerned about the uncertainty of policies from a macro perspective, and what's going to happen there, and they're also committed.
They're committed to bringing ideas forward. They've heard the government's call for ideas on growth and they've put forth some key ideas that we're calling the Growth Agenda eighteen, specific ideas from small businesses in the UK for small businesses
in the UK as to what could propel growth. And we're really talking about that because we think that's a tremendous potential opportunity if we frankly listen to the small business community, because those closest to the problem are often closest to the solution.
So plenty in those recommendations for the government to look at things like skills, you know, calls we've heard before from business groups here in the UK. What's kind of the most important ones, the most important message these businesses want to try and send.
I would say three things. One, access to capital. You need capital to grow your businesses. And what the small business community is asking for is effectively a summit. They want to bring together the small business community and match them with potential investors. Sometimes getting those connections. There's a bit of a plumbing issue to connect our small business community here in the UK with the investors that may want to contribute to their business, so they're asking one
for a small business summit. The second thing they're asking for is talent. Lots of them that have open positions can find individuals that are qualified for those positions, and they say, what we really need is some changes to the UK educational system to teach entrepreneurship how to read a spreadsheet, things like public speaking, time management, the skills that allows individuals to graduate and then be able to enter the business environment job ready and so phenomenal educational system.
But those tweaks our small business community is asking for. And the third one relates to AI. Small business community does not want to be left behind. As it relates to AI, they're leaning in. Some of them are already using various tools they report to me chat, GPT, Perplexity order and a number of other tools, but they would like to have a program where tech companies UK government get together with small businesses and really help them chart
that road forward. So those are the three very specific recommendations that we're hearing from small business community.
That's the near term, and then there's a longer term when it comes to education and ramping up those skills sets. What about taxes then, and we talked about the national insurance burden. To what extent is the tax burden on the SME space within the UK ahead wind or are they able to navigate that? How much concern is there about that burden.
It's a bit of both, right because our businesses we have over two three hundred businesses that have graduated from the program. This is the fifteenth year that Goldman Sax is doing the program. These small business owners employ sixty two thousand individuals. They are about five point six billion pounds of revenue, so really a substantial community. And so
some of them it's really is a headwind. It's increased their costs and they're concerned about that, and some of them have delayed their hiring or reduced their hiring as a result of it. Other businesses in our community are a bit larger and for them they're able to absorb the costs a bit more.
Is sentiment worse now than it was a year ago or before the government changed?
You know, I wouldn't say it's worse now. I think what we're seeing is, you know, with all the tariff discussions, you know a fair amount of uncertainty about what's going to happen to our small business owners in that environment? Tend to stand still. If you're going to open that new factory, if you're going to launch that new product, you're going to stand still and sort of figure out, well, what's the environment I'm going into before I expend those costs.
So what we're seeing is a slowing in terms of certain decision making that the small businesses had previously, you know, had on tap.
How they're thinking about international markets. And you know, I was speaking to the CEO of Euroinext today and he said, look, the US is simply becoming far less compelling as an international investment destination for European businesses and he expects a slow down in European businesses looking for example, to IPO in the US. When it comes to the view around Europe versus the US, whether this government needs to be more in terms of that relationship with Brussels and Europe.
What is this, What does the sense from small businesses and what are they prioritizing in terms of their international market.
It's a fabulous question because that's one of the things that we've been asking them about, which is what is your interest in terms of export doing business Almost universally, they're very, very interested in tapping more into the US market. We're hearing that across sector. Some of them are saying, one, how do I do that? You know, what's the roadmap
to be able to do that too? The regulatory burden in terms of navigating that, certainly the tariff's conversation is a part of that as well, But the interest is unequivocally there, and I think they're trying to figure out how they could potentially do that because they're interested in growth, and so is the growth opportunity here in the UK. But maybe there's additional growth opportunity in the US as well.
As I often say to people, you know, when I talk to business owners, we've got sixteen thousand in the United States that have graduated from the program, the twenty three hundred here. I'm often asked like, is the grass greener in the United States? And I usually say, the
grass is greener where you water it, right. And so the UK small business community is an extremely vibrant community, and we just need to make sure that we're listening to them, and this Growth Agenda document that we've published really is their views on what it takes for them to be able to expand.
It's interesting to hear that the policy conversation in the United States is being felt by businesses in that program as well. When we spoke last November, it was just after the election, and we talked to you about another part of your job, which is Goldman's philanthropic work, and how things might change under the Trump administration. I just wonder what has changed for that part of your job since then.
You know, we really have not pivoted in terms of our philanthropic commitment. Our signature programs have been on small business and entrepreneurship and that is steadfast. That is a bipart distant issue. It's an area that is concerned around the globe. We run this program also in France as well, and so that aspect of our programming has not changed at all.
Does the Trump administration policies walking back some of the focus, for example, well taking frankly a hostile view on things like inclusion diversity when it comes to that workforce, is that having an impact at all as businesses kind of to look look to that, to that pretty dramatic policy reset, and we say we're seeing businesses adjust to.
That we're not seeing the small business give Certainly everyone's listening to it, hearing about it, but we're not seeing changes in the way that small businesses run their business, in the way that they hire they these are these are enterprises like you know, a gym, a medical facility, a maternal health facility, that really are committed to how can I pay my employees they usually pay themselves last, how do I figure out the regulatory landscape? How do
I deal with the insurance tax? These are the kinds of issues that they're navigating, and frankly, they want the best talent wherever that that talent is going to come from.
Okay, say Pompey, great to have you with us in studio. Thank you so much for joining us. Global Head of Corporate Engagement at Goldman Sachs and President of the Goldman Sachs Foundation.