Investment zones, also known as enterprise zones or free economic zones, are designated areas that offer incentives and benefits to businesses and investors to encourage economic growth and development.
In the chancellor's Spring Statement on 15th March, he announced the government would create a further 12 investment zones across the UK. These are in addition to the 38 that then-chancellor Kwasi Kwarteng put in place during his time in office back in September 2022.
Eight of the new investment zones will be spread across England, in the East & West Midlands, South & West Yorkshire, Greater Manchester, Liverpool City, Tees Valley and the North East. The remaining four will be split between Scotland, Wales, and Northern Ireland - with at least one in each.
The twelve new investment zones will each receive £80m in funding support over the next five years, with the aim of boosting economic growth and development in these regions. The money will be used to improve connectivity, skills, and infrastructure, as well as providing investment support for local businesses.
The government has highlighted that the new investment zones are a key part of its plans to "level up" the UK economy and create fairer opportunities for all. This should ensure that the UK can continue to compete on a global scale, even after leaving the European Union.
Establishing investment zones is a way for the government to support local communities and build them up by injecting more money into the area. Small business owners can benefit from investment zones both directly and indirectly. Here's how:
Tax Incentives
Investment zones can provide advantageous tax incentives to small business owners, such as income, property, or sales tax exemptions or deductions. These reduced tax burdens can lead to increased profitability and competitiveness for entrepreneurs.
Regulatory Flexibility
Regulatory environments within investment zones may be more lenient, thereby allowing small businesses to acquire permits, licenses, and other necessary approvals faster and with less hassle. This, in turn, can help to minimise the time and costs connected to establishing and managing a small business.
Infrastructure Development
Investment zones can bring together public and private investments in transportation, communication, and utilities infrastructure. This can be especially beneficial to small business owners, providing them with greater access to customers, suppliers, and markets.
Talent Pool
Investment zones have the potential to draw in a talented and multifaceted pool of employees, presenting small business owners with a wider selection of qualified staff. This can provide a stimulus to the expansion of small businesses and the refinement of their operations.
Networking Opportunities
In an investment zone, entrepreneurs may have the chance to meet with other businesses, investors, and government representatives, providing the potential to form partnerships and collaborations. Additionally, small business owners may benefit from mentorship and guidance, in addition to gaining valuable knowledge from the experiences of their peers.
Overall, investment zones can benefit small business owners by providing tax incentives, regulatory flexibility, access to funding, infrastructure development, a talented workforce, and networking opportunities. These benefits can help small businesses grow, compete, and succeed in the local and global marketplace.
