James Sheard from TaxAssist Accountants Central Manchester takes a look at what impact the Chancellor’s Autumn statement may have on small businesses.
We will be hearing about the Chancellor’s Autumn statement in the news over the next few days. There would appear to be some help for small business; I’ll have a look at the small print before I have an opinion on the changes.
It is easy to get caught up in the bad economic news coming out of the media. I have put together a brief summary of my thoughts on the economy and how we can protect ourselves. My over riding philosophy is that my clients are private individuals and small business owners, whose prosperity is primarily determined by their own actions, hard work and ingenuity. It is up to us to make ‘it’ happen. However my take on the general economy is:
- The government is reducing its debt, individuals are reducing their debt and companies are reducing their debt. These trends result from high levels of borrowing in the boom years and more cautious bank lending requirements. These factors will be a drag on the economy leading to slower economic growth.
- The UK’s major trading partner is Continental Europe. Their governments’ inability to resolve the debt crisis together with a weak banking sector is leading to banks being less able and less willing to lend and businesses being less able and willing to invest. Some European governments are being forced to drastically reduce their spending. This is likely to lead to a recession in Europe and be a further drag on the UK economy.
- The Euro leaders determination to do too little too late is likely to lead to a major crisis at some stage next year, unless they get their act together very soon.
As I said at the start of this piece, most small businesses and individuals are mostly affected by their own actions. However, that does not mean that we can ignore the rest of the world, there are things we can do to protect ourselves:
- It is always advisable to take a 5 or 10 year view when investing in the stock market. It is particularly important to make sure you are not going to need to cash in on any investments in the forthcoming year.
- It is generally advisable to have 3 to 6 months worth of your spending saved in a deposit account, so that if bad things happen you can get by for a while.
- Cash is king in this sort of crisis so make sure you have loan facilities in place so that your business can meet it bills if there is an interruption to normal sales patterns.
- Prepare a proper financial plan for the forthcoming year. This is always best practice, if prepared properly it will show any cash pinch points.
It is not all bad news, many small businesses and individuals will continue to flourish. If there is a new recession, I’m sure that the deeper it is the sooner and stronger the recovery will come.
Please let me know if you would like to discuss any of the issues I have raised.