The recent quarter’s figures for GDP growth were abysmal, with an overall growth of 0.4%. Manufacturing showed only a 0.1% growth. This is against a background of an extremely poor matching period last year and last quarter 2010 GDP figures showing a contraction.
The government’s recent budget, whilst laudable in cost reduction and cutting out public sector jobs the country cannot afford, was disastrous in the fact that it offered nothing to stimulate the economy, save for a 250 million fund to help first-time home buyers and the raising of entrepreneurial relief up to £10m.
It did nothing to help the most important thing that is needed to stimulate the economy, which is putting entrepreneurs in a position where they can do what they do best; take opportunities, create wealth and as part of the process, pay tax and create jobs. The banks are the villains and the government are their major shareholders, and they need to alter the current position. Banks are borrowing at 0.5% over base and charging 5% over base, not many businesses achieve this sort of markup. But the critical point is that they are not lending freely enough to support entrepreneurs to stimulate the economy. This has to change, and the government needs to be a catalyst for this change. Without it, I feel we will be in our current situation until at least 2013.