The very fact that the government are having to print money to negate the effects of deflation shows how ill our economy really is.
Sterling could come under emormous pressure, and ultimately hyper inflation.
And if our current economy comes under inflationary pressure in its current state, requiring higher interest rates we could see 10% unemployment, business failures on a scale unseen in our lifetimes and a level of government borrowing that would take decades to sort out.
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.
The ASK Group in Bury St Edmunds is fighting back against the recession and credit crunch by continuing its investment policy and has seen this pay off spectacularly.
October was ASK’s record ever month with over £285,000 of new orders; more than £80,000 higher than their previous record month in 2007.
Celebrating 20 years in business this very month, ASK has invested this year in ISO9001, a 20Mb leased line, 2 new servers and a modern VOIP telephone system.
“Our recent investment and hard work seems to have produced amazing results”, said ASK’s founder and Managing Director earlier today. He continued, “our new clients have included Microsoft, amongst others, which I am very proud about.”
“I am certainly not complacent.The credit crunch has seen the value of my commercial premises drop by 30% and my residential property by 15%, which in turn affects the amount I can borrow to fund our business. However, I believe that real businesses and real people still need real work performing, recession or no recession. So whilst I believe people and companies have a demand or need for our services I will continue to invest all my time and money ensuring we can meet and increase that demand.”
ASK operate in a number of B2B sectors, are one of the UK’s leading translation companies, a leading digital print on demand provider, an ISO9001 website design and development company and run serviced offices in Bury St Edmunds. For further information visit www.askgroup.co.uk or telephone 01284 777900.
Like many others I run what I believe is a successful company.
And as I started it myself with no cash behind me, and have never sought external investors, it is inevitably funded on credit and debt. Again like most other UK small and medium sized companies.
Our balance sheet is obviously positive, so as long as our clients pay us we can pay all our suppliers, all our salaries, all our bank borrowing, and still have some left over.
But my BIG QUESTION is what do we all do if the banks wont fund us?
My late Saturday night after a beer thinking aloud is we could all enter into an exchanging goods and services for some form of equity investment, all becoming investment banks without exchanging cash.
We all then have a vested interest in each others success?
Let me know if you think it is a good idea or yet another thinking aloud silly idea to keep the UK economy lubricated!
Yes the UK economy is almost certainly in recession.
And yes the worst is yet to come!
However, I am both amazed and pleased to announce that at ASK we have had record UK sales in the last 3 months.
Our UK sales were up 15% on the same period last year.
We have advertised less, and a large proportion of our trade comes from the financial sector, so I am not saying it makes sense! The world certainly seems to have been turned upside down.
Complacent I am not, concerned I certainly am, but I truely believe all proactive strong UK companies will get through all this.
What we all have to do is not entrench, not stop investing, not stop speculating, and then together, with or without the help of financial institutions ensure the UK economy remains as strong as possible.
We have all over the last 10 years invested in strong infrastrucure and systems, and as they all remain in place UK companies like us are better placed than many around the world to ride out a recession or even a depression, and come back even stronger.
ASK will be continuing to think glass half full, and are NOT cutting back our investment plans over the next 6 months, I hope everyone else will do the same!
Whatever happens to the economy there is certainly nothing I can do about it, all I can do is look after what I can control - my business!
What is important is that we don’t panic and focus on the things we can control.
Yes house prices have dropped, this is uncomfortable but not a disaster, they will go up again, whether it takes 1 year or 10 years, ultimately they will go up. Having a roof over your head is much more important than the value of the roof!
The biggest problem to companies is a lack of credit. My company is certainly effected - especially as we provide a lot of translation work to the Financial and Banking industries. Clients are taking longer to pay and consequently we are taking longer to pay our suppliers. This is not something I am not happy about, but again it is not a disaster, given time market conditions will improve and everything will right itself.
Just say a deep recession happens, say a 5% downturn.
Very uncomfortable yes, a disaster, no. A disaster is an earthquake, terrorist attack or hurricane, not a financial downturn!
If we all had to earn 5% less next year, and all had to pay 5% more tax on what we do earn for an emergency 12 months to kick start the economy, would that be a disaster?
Knowing the media the following year they would tell us how fantastic we were doing if the following year we then had 2% growth.
I do however fear that politicians from all parties will not put in policies that will be in the economies best long term interests because it would cost them votes. But that’s for another blog!
I am no financial expert, just a humble business owner with 20 years experience. I do have my own Recession busting advice:
1. Don’t Panic, and don’t in this case count to 10 then panic!
2. Cut out unnecessary cost and waste.
3. Continue to invest prudently in Research and Development.
4. Communicate with your suppliers and be honest with them.
5. Know your break even figures.
6. Communicate with your bank.
7. Be innovative and make your business more efficient.
8. Work 10% harder.
This enables customers to build their corporate or personal calendars on our interactive website, which our calendar printing division prints.
Customers can upload their own photos or graphics to our amazing templates, or choose their selection of images from our gallery of photos.
Not just content with calendars that run January to December, you can select any starting month, add notable dates or notes, and have the calendar run for as long as you want, with some customers printing 24 month calendars.
All we hear in the media is impending doom and gloom, but will the credit crunch and financial turmoil and potential recession effect us all?
It is already effecting me. I own the commercial premises from which we operate, last October it was worth an estimated £1.3 million, today if it needed to be sold I would be lucky to get anything over £1 million. My residential property I purchased in May 2007 is likely to be worth less than I paid for it.
However as that is paper money and does not effect how I trade, how does that effect me apart from the feel good (or feel bad!) factor. I still have the same mortgage payments on both my commercial and residential properties, so it does not effect my income or outgoings.
Well banks lend on asset value, property often being the main one, as it is something tangible that they can quickly sell at auction if you can’t make the loan repayments. With 30% wiped off commercial property value, that reduces small and medium sized companies ability to raise capital.
And all this in a time when banks are reluctant to spend.
My worry is that this will spiral, sending companies bust, reducing property values further, meaning good solvent companies are starved of funds they need to invest and grow the economy.
How can we stop this? Well take politicians out of the loop to start with. They are not really interested in the long term, and are seldom entrepreneurial financial types.
Government needs taxes to pay for social infrastructure, so a downturn effects them just as much, so they need to boost the economy in times of strain.
My way for the UK property market would not be acceptable to any politician, but I’m here to be shot down so here it is. Scrap stamp duty on property in it’s entirety. This helps first time buyers, this helps the property market grow, this releases cash into the economy. Replace this with a property capital gains tax after 1 year. You would only pay this after you have sold your property and made a profit on it. The treasury can work out the level this would need to be set at. The year of no tax would help property move in the year property is most under strain.
The ASK Group and ToLocalise are pleased to announce that an agreement has been reached today for the market leading ASK Translation brand to handle all the ToLocalise’s translations for them.
Gary Keens, Managing Director of The ASK Group, said “We are absolutely delighted to have reached an agreement with Duncan Brown of ToLocalise. ASK is already one of Europe’s leading translation companies, working to ISO 9001 and BSEN1538 standards.
ASK will provide all the translation services to ToLocalise’s clients on ToLocalise’s behalf as ToLocalise’s sole provider.
All the ToLocalise clients will now reap the benefit of a larger highly trained professional translation team with more in-house services.
“ASK has recently developed its brand and is now a complete business to business service provider offering clients not only high quality translations but also graphic and website design and branding, E-commerce, audio and print solutions, including our ground-breaking print on demand service, making ASK a complete one-stop shop.”
To find our more about ASK Translation, please visit our website at www.translate.co.uk or call 0800 043 9831 and ask to speak to a member of the Account Management Team.
We had our first ISO9001 Audit earlier today and passed with flying colours.
With zero minor non-conformances, well above the average for the first audit, we have been recommended for ISO9001 certification by the auditing body, which should officially arrive in July.
The auditor from ISOQAR praised the staff he audited for their enthusiasm and professionalism, well done Kay, Ann, Lee, Emma, Sahar and Simon.
A big thank you to Elizabeth Pearce of Maverick Innovations Ltd who has been our ISO consultant assisted us with our quality manual, process maps and training … I got the feeling she was pleased as punch with zero non-conformances and that was a rare occurance!
After a year of putting it all together today has made all the hard work worthwhile.
Now we can go after work in the pharmaceutical industry!!