Leaders: Chancellor must do more to sustain SME recovery | Murray’s gold rush worth the worry

Published on 06/08/2012 01:16

A WELCOME effect of the inspiring performance of British athletes at the 
Olympics has been the ascendancy of unambiguously good news for the past week and the side-lining of our economic woes.

Few conditions would more help towards lifting business and household confidence and with it our recovery prospects than the sustained return of a long-absent “feel-good factor”. Unfortunately, to judge by the report this morning from the CBI on deteriorating conditions for the UK’s small and medium-sized enterprises (SMEs), the economic feel-good factor is as remote as ever.

The SME Trends Survey should be of particular concern to Chancellor George Osborne. He has sought in his previous budgets – with little evident success so far – to energise this sector and put it in the front line of recovery. Such a recovery requires a rebalancing of the economy away from over-dependence on financial services (in particular banking) towards the production sector.

Looking at this and other troubling pointers expected this week, Mr Osborne needs to grasp the initiative this autumn and leave us in no doubt that the government is doing all that it can within the constraints of our debt and deficit burden to encourage the private sector to invest for expansion and take on more staff.

There are some grounds for hope. SMEs increased their headcount in the quarter to July. However, today’s survey warns the pace is likely to slacken – a signal to the chancellor that a sustained improvement will need government help.

Mr Osborne can counter this forecast slowdown in several ways. One is to provide government guarantees of initial funding support for infrastructure projects. This would help catalyse private sector and in particular pension fund participation. He could opt for a National Insurance holiday that would remove for a time a notable disincentive to employment for SMEs. He could give a boost to the 
beleaguered construction sector through a temporary reduction or lifting of VAT on home repairs and improvements. This would both stimulate the building industry and provide encouragement for households to spend on furniture and white goods.

Arguably as important as all of these is a firm demonstration of leadership and support for the enterprise sector. Such support is vital to augment the £80 billion Finance for Lending scheme launched last week by the Bank of England. For this to work effectively, business confidence needs to be given every support. In addition, the economy will almost certainly need further monetary loosening through Quantitative Easing in addition to the 
£375 billion already announced.

Such a programme of measures on fiscal and monetary fronts would bolster business confidence and activity in the face of continuing financial convulsion in the eurozone. We need more from the Chancellor than a hand-wringing impression of Mr Micawber.

Murray’s gold rush worth the worry

WE NEVER doubted him for a moment. We might have worried, fretted and agonised, but we never doubted Andy Murray would beat Roger Federer to become Olympic champion, and claim a gold medal for Team GB.

Murray’s defeat of his Wimbledon nemesis was emphatic. Unlike a month ago when he failed to beat the Swiss at the same venue, he was in total command of the game from the first serve to the last.

To those who may question whether his opponent was tired after a tough tournament, the riposte is obvious: Murray could also have given the same excuse given his stalwart efforts in the mixed doubles.

That he did not appear to be tiring and stormed to victory in three straight sets is a mark of the young man for Dunblane, and suggests that we may have underestimated his resolve to bounce back from his previous, mentally crushing, defeats to Federer.

Murray’s win must surely auger well for his finally securing a win in a grand slam tournament, both in terms of the ruthlessness he demonstrated and the boost to his confidence this victory will give him. However, we must remember this was not just any tennis competition but the Olympics.

Murray’s win yesterday, mirrored by sailor Ben Ainslie, was the climax of a brilliant weekend of gold for Team GB.

Jessica Ennis, Mo Farah and Greg Rutherford took gold on “Super Saturday”. The women’s team pursuit cycling team did the same as did the women’s double sculls pair and the men’s coxless four in rowing.

It was worth the worrying and the fretting to see Murray help Team GB strike a rich vein of gold.