Editor's View

Economic reality

Nov 09 issue

Entrepreneurs are natural optimists. They have to be, as it is common knowledge that nearly half of all businesses fail within the first three years. So it comes as no surprise to see surveys reporting that business owners are confident about 2010. One recent poll of 7,000 small businesses found that 75 per cent expect an upturn next year.

Encouraging as that might be, it’s easy to confuse optimism with economic reality. Our finance feature asks a broad mix of people in business how they expect the economy to fare in 2010. Sure, there’s the vim and vigour you’d expect, but there’s also the realism that comes with Britain being the only larger economy still in the mire of recession.

The latest £39 billion bailout will, in all likelihood, see the UK economy grow for a couple of quarters early next year, but that’s soon going to change after the general election (a coincidence?). We all know what’s coming – higher taxes, rising unemployment and industrial action galore as the public sector cutbacks begin. Postal strikes aren’t the half of it.

Will the banks play ball?
A lot of pressure will be eased if bank lending improves. This doesn’t mean handing out money recklessly, which is what got us into this mess in the first place.

In a display of diplomacy worthy of The Apprentice, Lord Alan Sugar (still the government’s enterprise tsar at the time of going to press) reportedly made comments that only 15 per cent of the businesses turned down for bank loans had anything to complain about, while the rest were moaners who ‘lived in Disney World’. The situation is more complicated than that.

Smaller companies with less headroom need flexible banking facilities. Other companies, which are performing well, may consider expanding by launching new services or making acquisitions, and should be given the opportunity to do so. Moreover, there are wannabe entrepreneurs out there who need support and backing, especially if it’s in the area of “making things”. Given the international nature of business, ‘Suralan’ would certainly find starting a computer company in the UK today a whole lot harder than in the 1970s.

Creating an accessible and centralised system to support both new and existing businesses remains the long-standing priority for entrepreneurial Britain. This doesn’t only mean providing financial support, but making it easier to access information and meet the right people. As our article on engineering and technology shows starting a company has never been easy, but does it really have to be such an uphill struggle in the UK?


Editor's View Business Bulletin Trailblazers Business Tools Finance Expansion Strategy Leadership Flotation Exits Columns Enterprise News Deal Listings Backchat	Editor's View Economic reality Nov 09 issue Entrepreneurs are natural optimists. They have to be, as it is common knowledge that nearly half of all businesses fail within the first three years. So it comes as no surprise to see surveys reporting that business owners are confident about 2010. One recent poll of 7,000 small businesses found that 75 per cent expect an upturn next year. Encouraging as that might be, it’s easy to confuse optimism with economic reality. Our finance feature asks a broad mix of people in business how they expect the economy to fare in 2010. Sure, there’s the vim and vigour you’d expect, but there’s also the realism that comes with Britain being the only larger economy still in the mire of recession. The latest £39 billion bailout will, in all likelihood, see the UK economy grow for a couple of quarters early next year, but that’s soon going to change after the general election (a coincidence?). We all know what’s coming – higher taxes, rising unemployment and industrial action galore as the public sector cutbacks begin. Postal strikes aren’t the half of it. Will the banks play ball? A lot of pressure will be eased if bank lending improves. This doesn’t mean handing out money recklessly, which is what got us into this mess in the first place. In a display of diplomacy worthy of The Apprentice, Lord Alan Sugar (still the government’s enterprise tsar at the time of going to press) reportedly made comments that only 15 per cent of the businesses turned down for bank loans had anything to complain about, while the rest were moaners who ‘lived in Disney World’. The situation is more complicated than that. Smaller companies with less headroom need flexible banking facilities. Other companies, which are performing well, may consider expanding by launching new services or making acquisitions, and should be given the opportunity to do so. Moreover, there are wannabe entrepreneurs out there who need support and backing, especially if it’s in the area of “making things”. Given the international nature of business, ‘Suralan’ would certainly find starting a computer company in the UK today a whole lot harder than in the 1970s. Creating an accessible and centralised system to support both new and existing businesses remains the long-standing priority for entrepreneurial Britain. This doesn’t only mean providing financial support, but making it easier to access information and meet the right people. As our article on engineering and technology shows starting a company has never been easy, but does it really have to be such an uphill struggle in the UK?