More than just snow hurting small biz
Time for Osborne to act, say SMB groups
Yesterday's fall in GDP cannot be blamed on mere bad weather and shows the government must do more for small businesses or risk a double-dip recession, business lobby groups have said.
Yesterday, the Office for National Statistics said the GDP fell by 0.5 per cent in the fourth quarter of 2010, compared to 0.7 per cent growth in the third quarter.
Chancellor George Osborne said there was no way he would change policies because of "one very cold month".
The Federation of Small Business (FSB) said the year had brought nothing but bad news for smaller firms – including VAT rises, fuel duty and negative GDP.
John Walker, national chairman of the FSB, said the government could not just cut its way to growth. He said other countries had cut VAT in some areas, such as construction. Walker wants to see an extension to the National Insurance holiday and action on the manifesto pledge to introduce a fuel stabiliser.
The Forum of Private Business blamed slow movement on bank reform – notably their continued refusal to lend to small companies on an affordable basis and failure to act on late payments – which it said was doing more damage to the UK economy than snow.
Alex Jackman, senior policy adviser at the FPB, said the cold winter had had an impact but warned that "still not enough has been done to remove the shackles created by tax, red tape and the continued lack of affordable funding preventing SMEs from growing, creating jobs lost in the public sector and driving real, sustained economic recovery".
The complaints mirror remarks earlier this week from big business lobby group the CBI calling for government action to get the economy back on track... The group warned that the coalition had failed to show any imagination or vision for the UK economy beyond engaging in an orgy of spending cuts.
...as opposed to Nulabour...
...whereby if you're not skint, they'll tax you until you are, and tattoo a barcoded serial number on your forehead while they're doing it.
The real problem is that the media denigrate any politician who has the balls to go...oops, things have changed, new policy, new action required... so even when they are clearly wrong (as Thatcher, Major, Blair, Brown and now this lot have been) they feel obliged to pretend they are cleverer than the rest of us and we are so stupid we can't see the only way to fix the increasing mess is to keep s***t**g.
There are only a few actions that will help:
a) Use the two banks we own to cut business bank charges and loan rates by TELLING them what charges and interest rates they are allowed to change
b) Stop using interest rates to try and control inflation. They don't really work. What happens when you put them up is you prevent investment in our future, investment in increased production, you move money from those with debt (about 40% of the population) to those with savings (about 2%) and leave the rest untouched and untroubled. Instead use tax which affects everyone.
c) Throw the rest of us a morsel of meat so we feel better - such as 110% tax on all bank bonus payments this year.
And the next crucifiction will be carried out by the BofE MPC
Seems that an increasing number of these people are losing their marbles (2 at the latest count).
They appear to think that they can reduce global inflation by further sucking money from the British poor to give to the rich by imposing higher interest rates.
The inflation we see in the UK is based on global oil and food prices rising, clearly we consume so much of both compared to say the Chinese, Indian, American or other European citizens that, according to these people, global demand and inflation is down to just those in the UK with a mortgage or credit card!
So, the answer is clearly to take more money from those with mortgages, credit cards or other debts and give it to the rich ponces that already have more money than they know what to do with (5 million pound bonus anyone?)
Now the other half of the inflation equation - supply - is completely ignored by these two. When demand increases and supply increase price doesn't change. But to increase supply you have to invest in more plant, more machinery, more people to increase business. BUT if you increase interest rates, or even if you just threaten you might, business can no longer afford to invest in increasing production - especially smaller business. So raising interest rates stops investment, stops the increase in supply, inevitably plant, designs, machinery and people wear out and supply will ultimately drop (as it has in England - try buying a British car these days to see how far our supply capability has fallen).... ultimately then raising UK interest rates has the following effects:
a) No appreciable change in global demand, so no slowing down in global inflation in commodotie products
b) An appreciable cut in investment by British industry leading to a slow down in manufacturing, exports, employment and the destruction of yet more of our potential future, reducing supply and boosting inflation.
c) An appreciable captial movement from those who can't afford to live without borrowing to those already rolling in it.
I expect the BofE interest rates to shift up appreciably during the next few months and the recession in the UK to deepen hugely, unemployment to climb from its present (ONS figures) 30%, tax rates to rise to pay for the benefits required for the newly unemployed, further public service cuts, further unemployment, further price rises as the Chinese continue to make use of the fact that our manufacturing is shutting down totally............
In short further disaster.
Of course, even the threat of this is probably enough to start the problem - if you were a business would you borrow now when you think the debt will get far more expensive in the near future?
Pity we can't have some 'leaders' who can think beyond their next expenses fiddle or golf game.