Will our festive spirits be dampened?


This is the time of year when we remember we need to get our tax returns back to HMRC and to reflect on whether the Chancellor is going to use his pre budget report on December 9th to dampen our festive spirits or leave our tax breaks unscathed. I’ve decided to hedge my bets and put some in my pension now – just in case it is all doom and gloom. Given the size of the debt mountain that the country has I can’t imagine he is going to cheer us all up.


I was browsing an old edition of The Economist (21st November 2009) the other week and came across an interesting article warning small companies to worry about the upturn as we may not have enough capital to fund the recovery. Let’s say that would be a nice problem to have but perhaps we should consider that given the oligopoly we now have in the banking market we need to plan ahead for any funding requirements we may need. It will probably take much longer than before to get funding sorted out, given the paperwork that the banks now require and the lack of alternatives to bank finance. The British Venture Capital Association confirmed that its investment in new and fledgling companies fell by 17% in 2008.


Having said all that the article did say that 6,200 businesses have taken up the government’s enterprise finance guarantee scheme and there is still £650m of loans not yet taken up if the target is still for £1.3bn of loans to be made available. Many businesses have also opted for the tax deferral schemes now available.


I also read with interest that Monday 7 December was a bumper date for internet sales and the past weekend saw sales in the West End of London have their best trading day since the downtown began and trading was up 33% on last year. Another good sign I read about was the success that Scottish universities have had creating new companies. There are lessons we can learn from our Scottish colleagues where any Scottish Enterprise money has to be matched with money from other private sources which has stimulated more investment. Scottish Enterprise is even saying that investment in new companies in 2009 may turn out to be higher in Scotland than in 2008 which would be good news. As investors have seen their supposedly “safe banking and property shares” go up in smoke they are now looking around for other options and Scotland is benefiting from the increased interest in more potential investors. I think those Scottish festive spirits are far from dampened and Happy Hogmanay to all those enterprising Scots!

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