The continual exacerbation of stock markets and the Euro, and the lack of real political ideologies have taken a great toll on the UK’s economic recovery. Employment is diminishing and the chances of our financial situation picking up seem very, very bleak.
The UK government, however, is sticking to an agenda that puts faith into the Private sector restoring Public sector jobs cut, providing a more stabilised economy.
…it takes a year or two – or three…
Evidently, the Private sector hasn’t been able to match Public job cuts with Private opportunities, and with one year’s experience behind us, it’s easy to feel complacent: to label the government’s actions and belief in such a system ludicrous. But, often, it takes a year or two – or three – for government policies to make an impact. The policies of the 1980s that internationalised London’s financial system took several decades to solidify.
Perhaps it’s better to give the government more time? Perhaps.
LEPs have no funds from the government…
Yes, the government is taking necessary action to reduce the Public sector’s size, which has zoomed past the Private sector’s during the last decade (creating a veritably unsustainable and unfair system, especially in terms of pensions), but it is not, in any way, helping SMEs that have been left short due to the closure of the Regional Development Agencies. These agencies invested directly into businesses, helping them out in a climate which saw ever decreasing loans to businesses being secured. These are now gone, replaced by another system that relies on local bodies investing into companies.
The new Local Enterprise Partnerships (LEPs) look great on paper, and sound magnificent in a magnanimous age where business philanthropy is high, but in reality it cuts small start-up businesses out of the running all together. LEPs have no funds from the government: they are an extension to councils and governing bodies, where investment comes from their own budget.
LEPs are killing off real small business…
This means small investments between £10,000-£250,000 are impossible to secure because LEPs treat investments like many private operations: as something that is far more likely to succeed and reap big returns if it is between £2million to £10million – it is a funny truth that looking for larger sums of investment is a lot easier than smaller sums.
LEPs are killing off real small business, the vast majority of which look for £50,000 to £70,000 to start-up, stifling young entrepreneurs who are essential to sourcing the economic growth of the future. You compare this to America where there is a lot more investment in young people and their ideas.
SMEs account for 99.9% of all business in the UK, and bring in over £1.6 trillion in revenue. Killing off specialised agencies that help create businesses of the future is an absolute disaster, and will add to the current economic policy’s decay. The government may, for good reasons, be tightening the purse strings, but, for goodness’ sake, it should not be biting the hands that are wanting to feed it.
Image courtesy of Julien Berthier