The Budget: 'People will still be thinking hard before borrowing money'

Published on Tuesday 22 June 2010 20:38

ELECTRONIC component maker European Circuits has undergone a dramatic expansion over the past 18 months but managing director Mark Briscoe said yesterday's Budget would make him think twice about further growth in the short term.

The company – which this week opened a 15,000 square metre production facility in Clydebank, quadrupling its floor space – has doubled its workforce to 33 so it can grab a bigger share of the circuit board market.

Briscoe said any benefits from the cut in corporation tax – which he described as a "killer" tax for small businesses – would be eaten up by the rise in VAT to 20 per cent.

He said the cuts to capital allowances would also make many businesses more reluctant to invest in new machinery for expansion.

Brisco added: "I don't think the Budget will increase people's confidence. People will still be taking a long, hard think before borrowing money to invest in new machinery.

"We need the banks to start lending again so that companies can buy more equipment and create jobs.

"The banks have gone from one extreme to the other – they used to lend you money even if you didn't have a business plan, but now they need to know your inside leg measurement before they'll even consider lending to you."

European Circuits, which has an annual turnover of about 1.7 million, is one of only two Scottish companies operating in the printed circuit board market, building parts for the oil and gas industry, the defence sector and electricity meters.

He said the business had diversified – making boards for a range of devices from brake sensors through to flood sensors – so that it was not reliant on just one customer.

Briscoe said he would like to see more help for the manufacturing industry, especially to encourage companies to reinvest in their businesses.

Briscoe added: "We've just come through a huge expansion that we'd like to continue but we need to get our house in order before we do anything else. The encouragement to carry on expanding just isn't there for us right now."

Changes to employers' national insurance contributions were "small beer" in respect of the UK wanting to encourage employment, according to Briscoe.