Business calls for clarity over public finances

Most businesses agree with the recent sentiments expressed by the Bank of England Governor, Mervyn King, over the need for a clearer plan outlining how the public finances will be improved.

In the latest British Chambers of Commerce (BCC) Monthly Business Survey, over three quarters of companies said they believed the Government had so far failed to present an appropriate strategy explaining how they will restore the UK’s finances to health.

The results from 400 companies also revealed that despite commitments to increase lending, businesses still face real difficulties accessing finance. A mere 6% of firms thought credit was easier to get hold of over the last 3 months, while a fifth said access had worsened.

The key findings from the survey include:

• Less than a quarter of firms (23%) think the Government has outlined an appropriate strategy to improve the UK’s finances.
• 20% of companies believe access to finance has worsened over the last three months; 6% believe it has improved; and 74% think it remained unchanged.
• Approximately three quarters of firms (76%) believe uncertainty surrounding Gordon Brown’s leadership is distracting the Government from tackling the recession.
• Just one in four businesses (25%) has the capacity to recruit a new graduate over the next 6 months.
• In spite of recent falls, over 60% of businesses believe inflation will rise within a year. 8% of firms believe inflation will shoot up by more than 3%.
  

Commenting, Director General of the BCC, David Frost, said:

“It is clear the Government has more to do if businesses are to be convinced there is a comprehensive strategy in place to improve the dire state of the nation’s finances.

“What is particularly concerning is how few businesses are reporting improvement in access to finance. If the banks do not grasp the nettle and start lending effectively to the private sector they will simply be playing a part in prolonging this downturn.

“Banks have a responsibility not just to lend, but to lend to the wealth creating sectors of the economy.”

Ends

Media Contact:

Sam Turvey
Tel: 020 7654 5813
Email: s.turvey@britishchambers.org.uk

Notes to Editors:

Full results

The size break down of firms is as follows:

0-9 Employees: 41.2% of respondents
10-49 Employees: 33.8% of respondents
50-99 Employees: 11.1% of respondents
100-249 Employees: 6.3% of respondents
250-499 Employees: 2.6% of respondents
500+ Employees: 5.0% of respondents
 

Q1 – Economy Next Three Months

Firms were asked what their expectations for the UK’s economic performance was over the next three months:

33% responded that it would improve.
48% responded that there would be no change.
19% responded that it will deteriorate.

Q2 – Access to Finance
 
Firms were asked how their ability to access finance had changed over the last 3 months:

6% stated that it had improved.
74% stated that it had remained the same.
20% stated that it had worsened.

Q3 – Inflation

Firms were asked about their expectations for inflation over the next 12 months:
 
4% expect it to go down.
27% expected no change.
20% expected it to rise by up to 1%.
24% expected it to rise between 1% and 2%.
9% expected it to rise between 2% and 3%.
8% expected it to rise by more than 3%.
8% had no idea. 

Q4 – Political Uncertainty

Businesses were asked if the uncertainty surrounding Gordon Brown’s premiership was distracting the Government from tackling the recession:
 
76% said yes
24% said no
 
Q5 – Public Finances

Businesses were asked if they thought that the Government had outlined an appropriate strategy to improve the UK’s finances:

23% said yes
77% said no

Q6 – Graduate Recruitment

Businesses were asked if they have the capacity to recruit new graduates over the next 6 months:

25% said yes
75% said no

Q7 – Business Rates

Businesses were asked if they would take advantage of a scheme to spread the payments of the increase in business payments for 2009/10:

15% said that they were highly likely to take it up.
23% said that they were likely.
33% said that they were not likely.
29% said they were not at all likely to take up the scheme.

The British Chambers of Commerce (BCC) is the National Voice of Local Business.
The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce serving business across the UK, which employ over five million people.