The survey of 1,000 SME leaders and decision-makers, commissioned by Paragon Bank, also found that business tax reform (36%), business rates (35%), innovation and investment incentives (30%), skills and training (27%) and access to finance (26%) are high on SMEs’ wishlists for Budget updates.

Paragon said that SMEs were among the most impacted by measures implemented in the previous Autumn Budget. The survey revealed that the increase in employer National Insurance Contributions (NICs) impacted 73% of SMEs, followed by the corporation tax rise (69%), national minimum wage increase (64%) and capital gains tax increase (59%).

Additionally, nearly half of SMEs (47%) claimed that rising operational costs was the biggest challenge their business currently faced, followed by employment costs (36%) and access to finance (29%).

Despite these cost hikes, 45% of leaders and decision-makers rated the government’s support for SMEs in its first year as ‘good’ — although this varied significantly across sectors, with 15% of construction firms giving a ‘good’ rating, compared with 61% of businesses within farming and agriculture.

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When asked whether they feel confident the government understands the needs of their sector, 61% of SMEs overall said they felt ‘very’ or ‘somewhat’ confident.

Nearly two-thirds (65%) of SMEs say they are optimistic about their own business prospects over the next 12 months, although only 47% are optimistic about the UK economy as a whole.

Phil Hughes, deputy managing director at Paragon SME Lending (pictured above), said: “SMEs are the backbone of UK business. When they fail, the economy fails. This latest research reveals their clear message to the government: adding more cost and taxation will only hinder growth and innovation.

“As a lender working with 16,000 SMEs at the coalface — from manufacturers and farmers to construction companies and hauliers — we see first-hand the headwinds they face, and while they remain as adaptable and ambitious as ever, ongoing Budget uncertainty only intensifies an already-challenging operating environment.

“While SME sentiment towards the government is currently somewhat favourable, policymakers shouldn’t count on it for long. To earn long-term confidence the chancellor urgently needs to give SMEs clarity on how the government is going to kickstart this promised growth and ease the burden of increasing operational costs.”