Business confidence increases but how are they to finance growth?

Posted: Friday, 16 March 2012 @ 10:09

There have been several positive signs in the last few weeks that the economy might have turned the corner.

A survey by the Institute of Directors of its members showed that 50% of business leaders expected revenue to increase in 2012 and 40% expected to increase profits over the year. However, when it came to investment plans, only 27% expected to increase investment, with 29% expecting it to be lower.

The Federation of Small Businesses reports a survey of its members showing that more than half expected to grow in the next year with 27.4% planning to increase investment.

There are also some signs that the rate of increase in unemployment is slowing.

Whilst these indicators don’t suggest that strong, sustained growth has returned, they do show that business confidence is picking up. This is so even with so many dark clouds on the horizon, such as the ongoing Euro crisis and the prospect of oil price hikes due to the Iranian situation.

Business confidence is probably the single most important factor in an economic recovery. Without it, there can be little hope of growth and, without growth, reducing the public sector deficit will remain difficult and the employment situation will not improve.

But business confidence will only increase if finance is made available to viable companies who need it to grow. The banks are still not lending enough and this is forcing businesses to look to other sources of finance. However, one of the key roles that banks must play in our economy is to provide finance to businesses, which was one of the key justifications for bailing out so many of them in the first place.

The government must urgently find new ways to encourage banks to lend more and also help other funding initiatives so that this new spurt of business confidence can translate into growth and jobs.

Gary Cousins
Business Solicitor

Blog by Gary Cousins
Gary has been providing legal advice to shareholders, directors and business owners for over 25 years. Specialising in dispute resolution Gary is based in Birmingham with clients throughout the UK and overseas. View profile
Call Gary on +44 (0)121 778 3212 or by email
This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation to discuss your particular circumstances.

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