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31 December 2011

John Walker, National Chairman, New Year message

Reference number: PR 2011 75

FSB News Release
PR 2011 75

Issue date: 31 December 2011

 

John Walker, FSB National Chairman''s New Year Message

 

2011 has been a year of huge global events and news stories which have had us all gripped. And next year is set to be yet another tough year for small businesses.

 

The Federation of Small Businesses'' (FSB) quarterly ‘Voice of Small Business'' Index made for some gloomy reading in 2011. The Index has been a good barometer for how the economy will fare.  As the year progressed, small firms'' confidence plummeted, matching the Government''s GDP data.  For the first time employment intentions turned negative, with small firms looking to reduce their staff – again in line with unemployment data. We will publish the final quarterly report for 2011 in January, which will give a further indication of how small firms feel they might get on in 2012.

 

Throughout this year, costs have risen, economic growth has faltered and unemployment continued to increase. Rising energy costs fuelled huge increases in everyone''s utilities bills, not least small firms. And with energy being a major contributor to high inflation, it has put a further squeeze on small firms'' cash-flow. Ever-increasing fuel prices have played their part too and will continue to be another big issue again next year, with fuel duty set to rise yet further. To answer this pressing issue, the FSB will continue its call for a true fuel duty stabiliser so that small firms can plan ahead.

 

A major factor behind the weak economy has been the eurozone crisis. This has drained confidence and will continue to as we enter 2012 unless policy makers finally get to grips with the underlying issues.  With that backdrop, next year looks set to be just as challenging.  Yet in spite of all these challenges, small businesses have shown their resilience and will take opportunities when they arise: we know from research to be published early next year that many businesses that wanted to grow and innovate over the past two years have managed to do so.

 

This is why we launched the Real-Life Entrepreneurs campaign, to champion every single person who takes a risk to set up or run their own business. It is these entrepreneurs that will help pull the economy onto firm ground.

 

There will also be some golden opportunities for businesses in the year ahead. We know that for many small firms, 2012 is the year that they want to grow, innovate and expand. 2012 can be a chance to turn things on their head. With the Olympics and the Queen''s Jubilee, there is plenty to boost everyone''s spirits and for businesses to expand, diversify and benefit from these events.

Inflation should begin to decrease.  This should have a positive effect on small business overheads and help consumer confidence. With exports reaching record levels in 2011,  exporting looks to be an area that small businesses can develop especially in the vibrant markets in Asia.

 

But small businesses cannot solve the economic crisis alone and will need help. Job creation is going to be critical in 2012. Unemployment has risen continuously over the past year. And the number of people that are claiming Jobseekers Allowance has risen to 1.6 million – a continual rise over six months. This needs to stop.

 

The New Enterprise Allowance scheme (NEAS) has been a great success, but it could do better if the Government made a couple of simple changes and ensured that people signing on to Jobseekers Allowance can benefit from the scheme from day one. Extending the time people receive NEAS money from six months to a year will also ensure that these start-ups will survive and flourish.

 

What is most worrying is that certain areas of society are being hit hardest. The number of women out of employment has risen to the highest level since 1988 with 1.1 million women out of work. And young people are also taking the hit with 1.03 million – the highest since records began in 1992.

 

Many of these will be budding entrepreneurs and should be encouraged to set up in business. Yet, only 29 per cent of entrepreneurs in the UK are women. Aspiring to create 100,000 female owned businesses, followed up with mentoring, will help encourage women to take the step and set up in business.

 

Bringing forward the youth contract, and ensuring young people can use these opportunities from day one of claiming benefits, will ensure that young people are getting the skills they need early on and not losing out at the very beginning of their career.

Part of what has held small firms back has been because they cannot access finance from the banks. Small firms have struggled this year, even if they wanted to take on staff, because they have had cash-flow problems. And the banks have still been unwilling to lend. So much so that our research shows that many businesses have missed their growth opportunities.

 

To tackle the problem, the FSB wants to see more creative thinking from the Government to tackle the dominance of the big banks. The Chancellor, through the Independent Commission on Banking, needs to put competition in the small business lending market at the heart of a safe and secure banking industry. He also needs to open up more avenues where small firms, especially start-ups, can access crucial seed finance. By doing so, more small businesses will be able to grow, innovate and take on staff.

 

The final big issue for 2012 will be small firms'' access to Government procurement contracts – only 6.5 per cent of contracts currently go to small businesses. The Government has said that they will aim to award a quarter of all contracts to small firms which would help boost the economy if the target is achieved. The FSB believes that it should do this by offering contracts in smaller lots so that more small firms can win individual contracts.

 

Small businesses are still simply getting on with the job at hand of running their business. They want to grow, innovate and employ – but they are being held back. 2012 needs to be the year that the Government really nurtures small firms – especially since it is the private sector that is being looked upon to put the economy back onto firm ground.

 

ENDS

 

Notes to Editors

 

1. The FSB is the UK''s leading business organisation with more than 200,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk

 

Contacts

Prue Watson: 07825 125695
Sara Lee: 07595 067068

 

For regional FSB contacts please go to www.fsb.org.uk/regions