The Chancellor introduced his Autumn Statement against the background of a global economy still struggling to recover from the credit crunch and recession. While officially we are not technically in recession, the reality is that many small businesses perceive that the seemingly ever-decreasing money supply is restricting the ability of many businesses to deliver real increases in growth - both in the top and bottom lines.
The coalition Government set out its stall in 2010 to eliminate the structural deficit by 2015 - a plan, which on the Government's admission, is no longer achievable. The sovereign debt crisis has hindered those economies seeking to climb out of recession and the events of recent months in Greece, Italy, the Republic of Ireland and other countries reveals the seemingly overwhelming challenge that countries who are burdened with debt are faced with.
The Government's fiscal mandate requires it to balance the structural current budget by 2015. As a consequence of the economic position today this is now planned to be attained by 2016/17.
With inflation continuing to exceed Government targets and costs for commodities either rising or threatening to increase, forecasting remains ever-challenging and an activity that almost seemingly invites continual reforecasting. This can be evidenced as the Office of Budget Responsibility (OBR) has again downgraded its previous forecasts.
So what about debt?
Government debt continues to increase. It was always recognised that debt would spiral during the lifetime of this Government. At the same time households have been struggling with repaying their own debt mountain. Today, many are struggling to downsize their debt. In so doing the economy is being denied the flow of funds it previously enjoyed.
The Government needs to see growth in the economy and with growth for 2011 now forecast to be less than one per cent followed by 0.7 per cent in 2012, it is clear that jobs and tax receipts will be closely monitored over the forthcoming months.
If you are in business you represent one brick in the business enterprise of the UK. How you perceive the next twelve months, what opportunities you face and what threats you envisage will determine the actions you take. If your business reduces its staff by one person that may be one person claiming unemployment benefit and, further, the Government receive no PAYE.
The growth the Government seeks is through exports but with few economies prospering and Governments cutting back on expenditure the remedy can only be achieved by innovation, hard work and effective routes to [global] markets - a remit that is not within the grasp of every business owner.
In recognition of this the Government has made a long term commitment to developing Britain's infrastructure - that commitment will create jobs and demand for products and services.
Further measures to assist businesses include a range of credit easing measures, worth up to £21 billion, to improve the flow of credit to smaller and mid-size businesses.
Uncertainty in the economy
The OBR makes it clear that there remain many uncertainties arising as a result of the debt crisis in Europe. These are mostly outside the control of the Government; the consequences of the failure of a European country, albeit Greece or any other are being worked through, we are advised, by HM Treasury officials.
"No man is an island" (John Donne).
What is your exposure to the economies of other countries? What credit insurance do you have in place? Undertaking a risk assessment is a key responsibility for any business owner. If you seek to become an exporter or expand your exporting, ensuring that growth is profitable and funds due are duly received is essential. Make sure you seek appropriate advice on the opportunities and risks.
How can we help? Please contact us to discuss measures you could consider to improve your top and bottom lines.