Whilst the government attempts to justify its strategy on deficit reduction, the reality is that the economy is not improving, in fact it is shrinking and that is before the real impact of the Eurozone crisis hits home. In the interim, businesses and the public sector continue to be squeezed with employees paying the heavy price of reduced incomes or unemployment.
Said Gerald Irwin of Sutton Coldfield based Licensed Insolvency Practitioners and Business Advisers, Irwin Insolvency, “The small business sector was relatively confident at the beginning of the year but undoubtedly the weak economy is beginning to sap that confidence deterring businesses from investing with SMEs struggling to access enough working capital to fund their future ventures.”
It would be churlish not to applaud the measures taken to encourage bank lending such as the Enterprise Finance Guarantee Scheme and the National Loan Guarantee Scheme. Indeed, these are certain a step in the right direction. However, lending growth ultimately lies in the hands of the private sector.
“Britain’s small businesses are the very lifeblood of the economy and account for over half of the country’s gross domestic product. Anything that helps to alleviate the latest economic pressures is all to the good. What is really needed is for banks and other lenders to improve the flow of credit which will give the economy a needed boost,” added Mr. Irwin.