Businesses unconvinced by strategy for growth

The majority of business owners remain unconvinced that 2012 will represent a better year for the economy, despite a number of Government initiatives aimed at boosting growth.

Just one in ten business owners (13 per cent) questioned in a poll by Moore and Smalley believed a £40billon credit easing scheme, announced in the Chancellor’s Autumn Statement, would lead to a better year for firms in 2012.

Half of those questioned (50 per cent) thought the raft of growth measures announced in the Autumn Statement would make little difference and that the economy was likely to remain in trouble throughout 2012.

Meanwhile, over one in three (38 per cent) of those replying to the poll believed that focusing on improving consumer confidence was the key to getting the economy back on track.

James Treadwell, partner at Moore and Smalley, said: “While the credit easing scheme will provide some comfort to small businesses, it’s clear from our poll that they want more help. Improving consumer confidence has once again been cited as vital to boosting the economy. While the announcements on housing and infrastructure spending should help consumer confidence, it’s unlikely to have a significant impact in the short term.”

The Government’s £40billon ‘credit easing’ scheme was seen as the biggest business policy of November’s Autumn Statement.

Businesses with a turnover of less than £50million will qualify for the scheme which aims to make it simpler to underwrite bank loans to small firms, thus reducing the risk for the banks and encouraging them to increase lending. The Chancellor believes it will cut the average interest rate for those firms by 1 per cent.

George Osborne also announced a number of other measures to boost the economy. From April 2012, anyone investing up to £100,000 in a new start-up business will be eligible for income tax relief of 50 per cent. In 2012, any tax on capital gains invested in such businesses will also be waived.

The Government has also identified more than 500 infrastructure projects - road, rail, air and high-speed internet - it wants to see built in the coming years. An extra £1billon is being allocated to the Regional Growth fund in England and almost £500m will be invested in high-tech industries.

The government has also announced a £500m housebuilding scheme in England as well as the mortgage indemnity scheme to help 100,000 people get onto the property ladder.

James added: “Whether the Government’s latest round of business growth measures will have an impact in 2012 remains to be seen, but the next 12-months will provide another stern test for the majority of businesses. Firms once again need to ensure they are keeping costs under control, monitoring their debtors closely, and using accurate management information to enable sound decision making.”