Expanding a Small Business

The problem with politicians from all sides is they are mostly short termist.

Rarely do we see policies that are unpopular and for the greater long term good that probably won’t make an impact until well after the politician has left office or been moved upstairs where they don’t have to answer to us, their constituents!

Some drastic long term action is required to get the economy moving, and some has miraculously been taken.

There is no way a 2.5% interest rate cut will have any meaningful effect, and if it does it is the wrong effect.

We have a severe credit crunch, and loss of credit facilities meaning people and companies cannot obtain funds to spend. A 2.5% VAT decrease is headline grabbing but not a solution.

All a VAT cut does is increase the chance of deflation, then when it is raised again in 13 months effect inflation. Large overnight changes in inflation is not a sensible stable policy.

And how much of the VAT cut is going to actually be spent by consumers on cheap goods imported from China made from oil based products? Our VAT giveaway is probably going to help the Chinese and Middle East economies as much as our own!

I am not a politician and wish my blog and my company to remain non-political with no political agenda. However if I was the CEO of UK plc not a small company and had no need for votes my immediate policies would be:

Scrap the 2.5% VAT increase.

Invest in infrastructure projects that benefit the country long term such as high speed cable internet and communications to the whole country, huge investment in green and carbon neutral energy solutions reducing our energy reliance on oil and gas, investment in flood defences, investment in modern IT equipment in every classroom. Upgrading the railway network. All these projects bring jobs to UK workers and give society as a whole a long term benefit.

I would put a small import tarif tax on all goods manufactured outside the EC and USA, using that money to specifically assist UK businesses and the banking sector.

I would underwrite commercial sector business loans for a period of 3 years with the banks, allowing companies to continue to invest and survive the downturn, and I would also allow companies to borrow up to 90% of their combined property and balance sheet values at 2.5% above Bank of England base rate. 

I would scrap stamp duty on property for a period of 12 months and review that in 12 months time.

I would reduce company National Insurance contributions by 3% for 12 months, to encourage companies to employ staff rather than lay them off.

I would underwrite all residential and commercial mortgages for 3 years (rather than just the residential mortgages up to £400k for 2 years).

This way far fewer companies go bust, probably 1 million less people will be made redundant (costing the tax payer much less), less houses would be sold at stupidly low prices at auction helping stop a property market crash, and by putting an import tax on goods from cheap markets EU and US workers are compensated from goods being purchased made with cheap labour, hence the playing field is levelled slightly – if only from the side of a mountain to a hill!

I want to invest in my company and currently require a small additional £250k loan to to this that will ultimately create 20 new jobs and make us more profitable, hence adding hugely to the exchequer. However my bank is cautious and without many of the above measures I fear like many other businesses will have to try to make savings elsewhere if we need to invest.