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One in five small- to medium-sized enterprises (SMEs) has been encouraged to expand following the Government's introduction of the employment allowance, which offers £2,000 a year towards businesses' national insurance (NI) contributions.
The employment allowance was announced in the 2013 Budget and was introduced with the intention of encouraging businesses - particularly smaller ones - to bring in more staff.
A survey of SMEs published today by insurance provider Direct Line for Business found 20% of respondents were more likely to expand as a result of the move.
In addition, a further 33% of respondents said they were looking to recruit because of the reduced cost of employment.
Jazz Gakhal, head of Direct Line for Business, said: "It is encouraging to see that so many UK businesses are looking to expand. The Government's decision to reduce the financial burden for small companies is a welcome boost for owners and managers across the country.
"Given that SMEs account for over 99% of all private-sector businesses in the UK, the health of this sector is vitally important."
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