Small businesses claim that government is costing them money

February 11th, 2009 by admin | Filed under Daily News, Recession, Retail, The Markets, UK Bank Accounts, UK Small Business.

A recent set of announcements from the Federation of Small Businesses (FSB) has indicated a low approval of the state interventions instigated to help them to survive through the current financial downturn.

A recent survey announced that most of the various Government endeavors have yet failed to take effect or been unsuccessful.

Many members of the small business federation have reported to the association that instead of offering support, many banks had deferred their applications for credit, which was supposed to be government-guaranteed.

The survey of four thousand small business enterprises reflects the current state of play among small businesses. The feeling is that the scale of the UK’s economic decline will make it difficult for many businesses to survive no matter their efforts and that the government support schemes, although provided with the best of intentions will not make too much of a difference.

More than half of the companies who participated in the survey, responded by saying that the recent government guarantee scheme was not a guarantee that bank lending would increase as a result, with many members already reporting that their banks had refused to extend them increased credit facilities.

Suppliers to Government bodies have also discovered that the promise made to settle accounts within ten days as well as to pressurise other public sectors also to meet the same commitment has been less than succesful, and the indications are that this may have been wishful thinking.

In a separate yet vaguely connected announcement, the FSB stated the despite pressures , Gordon Brown’s Government must hesitate in passing new laws on the next business law start date. Their fear is that these laws could cost almost a billion pounds annually to small business operators from Spring 2009 onwards. The dates for amended business regulations to come into force (April 6 and October 1) have signaled the onset of some fairly punitive changes in the past, that small businesses have been less than prepared for. In the light of past experiences, the FSB is calling on the Government to consider each new law and if it is possible to delay its passing, in order to defer costs to small businesses in 2009, which looks like being a very difficult year for trading.

Results of the recent FSB poll also stated that one in four of the association’s members believe that small to medium businesses will be those that will provide the push to pull the UK out of its current recession, but only if they are not overburdened by new legislation. They claim that during a recession there is no reason to change existing legislation, especially those that are liable to have negative financial implications on small businesses.

This assertion was given added weight by the announcement that

company incorporations in 2008 fell 17.2 per cent to 372,400 when compared with 2007.