Why SMEs are important to the UK economy

I believe that SMEs are in the best position to respond to the current economic climate and generate business that will contribute to UK plc and move us out of recession and into a more stable environment.

The infographic below generated by BIS provides some interesting statistics relating to small business within the UK:

SMEs ‘can power an economic recovery’

SMEs 'can power an economic recovery'

Small to medium-sized enterprises (SMEs) could be the driving force for an economic recovery in the UK over the coming months, it has been argued.

Ensuring SMEs continue to invest in the future of local communities is key to getting the country back on a positive economic footing, as many firms have been hoarding cash in recent years and it is now important that these funds are reinvested in ways that deliver long-term growth for the UK economy.

The Office for National Statistics revealed that the third quarter of last year saw a 4.3 per cent year-on-year rise in business investment. Overall, outlay for UK firms rose by 0.3 per cent on the previous three months to £30.1 billion.

The figures showed the UK’s manufacturing industry performed particularly strongly over the three-month period, with a six per cent increase on the previous quarter.

Source: http://www.taylorvinters.com/news/smes-can-power-economic-recovery/4667

Small firms will get £40bn boost over the next two years

Credit-starved companies face an agonising wait as the Treasury and Britain’s big banks wrangle over an adrenaline shot of as much as £40billion for the moribund economy.

They will have to keep their expansion plans on ice until well into the New Year as the government puts the finishing touches to its ‘credit-easing’ plan for small businesses.

George Osborne said he’d initially underwrite £20billion of loans to firms over the next two years in a bid to channel money to the bedrock of the stalling economy.

Read more: http://www.thisismoney.co.uk/money/news/article-2067838/Small-firms-40bn-boost-years.html#ixzz1gKcbWXCW

10 policies for UK economic growth

Conservative MP for Dover and Deal Charlie Elphicke has set out 10 policies he wants to see introduced in the Budget to boost growth.

For supporting larger businesses he suggests:

• Reducing the main rate of corporation tax to 19 per cent;
• Abolishing stamp duty on share transactions;
• Making changes so the UK becomes the corporate headquarter centre of Europe, including a tax rule to say foreign profits or interest payments brought into the UK by subsidiary business will not be taxed or deemed to be brought into the UK and taxed if held overseas.

For smaller businesses he suggests:

• Reforming UK trade and investment to enable SMEs to expand overseas more rapidly;
• Floating the smaller businesses growth fund on the London Stock Exchange;
• Lower capital gains for business assets or expansion of entrepreneur’s relief;
• Expanding specific reliefs for entrepreneurs and small business investors

The changes he recommends for regulatory reform are:

• The extension of the new enterprise allowance;
• The creation of transition enterprise zones;
• Less stringent employment law, including capping maximum compensation claims at the level of average earnings.

Source: http://www.moneymarketing.co.uk

Volatile economy remains UK business’ biggest threat

Over half of British SME owners see tough economic conditions as the main threat to their business continuing for the next two years, according to Scottish Provident’s Business Protection report.

According to the survey, the second biggest threat to SMEs (small to medium enterprises) (20%) between now and 2013 is the impact of climate change on the environment. Just one in ten view cash flow issues such as late payments as their biggest threat to survival, while just one in a hundred SME owners see red tape as their biggest burden.

While SME owners are most worried by these external threats, some realise there are also internal threats which could cause problems. Over one in five believe that there is a fairly high chance (at least one in three) of losing one of their key employees to a serious illness before retirement which will keep them off work for six months or more, showing that the threat of losing a key worker is a worry for many firms.

Read full article: http://www.freshbusinessthinking.com/news.php?CID=&NID=7668&Title=Volatile+economy+remains+UK+business’+biggest+threat

RBS Financial Briefing Jan 17th

Many of us use the New Year as an opportunity to change our behaviour. Yet 2011 didn’t herald a new approach to monetary policy from either the Bank of England or the European Central Bank (ECB).

Full report: http://www.paulgreen.biz/EconomicReport17January2011.pdf

Inflation hits record level

According to the latest Office of National Statistics (ONS) report the Consumer Price Index (CPI) annual inflation, the government’s target measure, was 3.7% in December up from 3.3% in November, bringing inflation to its highest level since April last year.

Companies could be affected by the unexpected high inflation rate as it is likely to lead to workers’ demand for higher wages, economists have said, as the effects of the cutbacks and VAT increase are felt.

Analysts had predicted that CPI would rise by 1% in December and were surprised by the extent of the increase. Howard Archer, chief UK economist at IHS Global Insight, told The Guardian that December’s data was “horrible”.

Read full article: http://www.growingbusiness.co.uk/inflation-hits-record-level.html

The UK economic growth slowed in the fourth quarter

The UK economic growth slowed in the fourth quarter of 2010, raising concerns about a sustainable recovery ? it expanded by 0.4%-0.5%, a slowdown on the latest official growth figure of 0.7% for Q3.

Source: British Chamber of Commerce

Business owners show growing confidence in UK economy

Leading entrepreneurs have shown increasing confidence in Britain’s economy as a new survey has revealed 56% believe it will improve over the next 12 months.

According to the Investec Entrepreneur Confidence Index, 56% of respondents also said they expected the economic climate to represent an opportunity for them, compared with just 14% who think it will be a threat.

The study found that the majority (91%) of entrepreneurs predict the profitability of their UK business will increase next year, with 44% saying that it is very likely they will launch new ventures in 2011.

Read full article: http://www.mybusiness.co.uk/YazxiKlo6VWuDg.html

Preparing for second credit crunch

To minimise the financial impact of the second credit crunch on your business, you need to make sure that you’re doing all the right things – and that your customers and clients are too.

Here are top 10 tips on how to safeguard your business from a second credit crunch:

1. Check your banking facilities to prepare for any cashflow problems and the cost
2. Make sure you understand the terms and conditions of your banking agreements and any borrowings you may have
3. Check on your potential and existing customers and make sure you keep on top of what is happening in their businesses
   Review your payment terms and monitor your clients’ payments
4. Have you got the retention of title provisions in your terms and conditions? For example, if a business you are working with sells and ships a product that you have contributed to and they have not paid you, do you still own the product?

Read more: http://www.mybusiness.co.uk/Yde-46JoGhP-DA.html