'Why does it require two quarters of economic decline to enter a recession and only one quarter of growth to exit it?'
Was Phil Orford, chief executive of the Forum of Private Business, being a spoilsport or simply pragmatic? 'Hand on heart,' he said, 'nobody looking at 0.1% growth in quarter four would say that we turned the corner,' he said.
Of course, it's heartening that we're a hairbreadth out of the slump. But it seems to have taken us some time to achieve this. The Times reports that 'Britain is the last of the G7 economies to emerge from economic decline. The slump, lasting six consecutive quarters, represents the UK’s worst recession since comparable records began in 1955.'
So what's the prognosis for small businesses? It could be a false dawn for SMEs, say insolvency practitioners R3. Previous recessions show that 'the recovery period after the downturns of the 1980s and 1990s were dangerous times for businesses'.
What happens is that, as the economy begins to pick up speed, creditors tend to become more aggressive, putting even more pressure on small enterprise. R3 polled 1,700 insolvency practitioners and came to the conclusion that 28,000 firms would go out of business this year, the highest number so far.
How can we give small businesses a boost? In his State of the Union address yesterday (27 January), reports Reuters, Obama called for the elimination of all capital gains taxes on small business investment and said he would seek tax incentives for all businesses that invest in new equipment. And taking a stab at the big boys, he said it was 'time to finally slash the tax breaks for companies that ship jobs overseas'.
Given the election, should Brown/Cameron take a leaf out of Obama's book?
