Darling’s budget passes over small businesses

April 23rd, 2009 by admin | Filed under Daily News, Recession, Retail, The Budget, UK Small Business.

Most people who had the courage to listen to Chancellor Alasdair Darling’s budget speech yesterday were left shocked but not particularly surprised by its content. One group who were left speechless however was the Federation of Small Businesses (FSB) who complained that the budget had largely ignored the small businesses. Businesses that are predicted to be the driving force behind the nation’s economic recovery as well as being one of its principal forces in creates new jobs.

Whilst the FSB expressed their appreciation of the Treasury’s focus on saving as well creating new jobs in the Budget, they also pointed out that small business enterprise must be encouraged in order to present a framework for job creation.

The majority of small to medium sized business in the UK are suffering from short and long term cash flow problems, with the Government’s proposed trade credit insurance scheme being seen as a lifeline for many. However ,

the FSB announced their disappointment that the Government had failed to announce automatic rate relief for small firms in the budget, and expressed their fears that the Chancellor missed the opportunity to give those firms the immediate financial boost they need at this time. This announcement came in the wake of U.K. Business Secretary Peter Mandelson plans released on Wednesday that the government to actively intervene in the trade credit insurance market with a temporary scheme designed to five billion pounds of Treasury guarantees. The feelings from the FSB is that the sum is insufficient and without a specific time frame.

Another brainchild of Mandelson, appeared to be given the “green light” in the budget are plans to boost the struggling motor industry with the introduction of a “car scrappage” scheme The scheme will allow consumers a £2,000 subsidy against exchanging their car for one that is more environmentally friendly.

Apart from the glum budget, it was also revealed yesterday that unemployment in the UK continues to climb. It has now reached 2.1 million in the first quarter, with last month’s figures signalling the 13th consecutive monthly rise.

The latest figures showed that a further 177,000 jobs have been lost, marking a 6.7 percent increase in unemployment, up by 0.6 percent from the previous quarter, according to figures released by the Office for National Statistics

The figures also showed that the number of people who have been unemployed for more than a year increased by 49,000 in the first quarter and is now approaching half a million.

Despite the doom and gloom, things on the stock exchange were still positive

On the day, the FTSE 100 added 43 points to close at 4,030.66 in London, while the FTSE 250 rose around 180 points to 7,159.96.

Retailers were the sector who showed the highest gains, led by auto retailer Inchcape, followed by video games retailer Game Group. Also doing well were sporting goods retailer Sports Direct International

Sterling fell back on Wednesday after the budget speech revealed the unhealthy state of public finances and the UK borrowing requirements for the coming fiscal year

Pound/US dollar 1.4566

Pound/Euro 1.1173

Pound/Japanese Yen 143.19

Pound/Swiss Franc 1.6979

US equities fell on Wednesday as a late sell-off in the financial sector as investor’s comments from Tim Geithner, the Treasury secretary, that the government wanted to retreat from the banking sector as soon as possible.

The Dow Jones Average dropped 83 points to close at 7886.57. Nasdaq rose by 2 points to close at 1645.85

Markets in the Asia-Pacific region were mixed again.

In Tokyo, the Nikkei 225 added 0.18 percent to 8,727.3 but the Topix index was down 0.09 percent to 829.96 and the Mothers market dropped 0.26 percent to 321.84.

Crude oil prices were lower right after the US Energy Information Precious metals prices were up but copper declined, while grains prices were mixed on the Chicago Board of Trade.

The International Monetary Fund (IMF) announced that they had revised their predictions and that the global economy is set to decline by 1.3% in 2009, instead of their original prediction of half a percent.

They also narrowed down their predictions to announce that major economies such as Germany, Japan and Italy will shrink in 2009 by an average of five percent.