It’s just not working…

The Federation of Small Businesses has hit out at the Government’s response to the economic crisis by saying that they view the measures that have been taken as a failure.

Through the economic downturn the Government has fallen back on their interest rate blanket as well as provided funding for firms around the country in an attempt to stimulate the economy back to its former glory.

The latest move saw the interest rate drop to a new record low, however according to businesses this has done little to help the sinking economy of the country.

Half of small firms see drop in trade.

A survey conducted by the FSB has uncovered figures showing that 50 per cent of businesses questioned have witnessed their trade slump since over the last two months clearly proving that the Government’s methods are not working.

The survey, which involved questioning 4,000 small businesses around Britain, also showed how the lending issue was still causing havoc as 11 out of 12 small firms claim that they are still hitting a brick wall when trying to borrow money from their banks.

This news is a disaster for the Government who have pushed an Enterprise Finance Guarantee, which was supposed to ease the risks for banks who were effectively required to keep the lending levels normal.

“Still more to be done by Government” – John Wright, FSB Chairman.

Outraged at the results discovered by the survey, the chairman of the Federation, John Wright, said, “These startling figures show there is still more to be done by Government and the banks to ensure businesses can survive in this economic climate.

“Small businesses are doing all they can to survive the recession but they need better support from the Government, the banks, and the public and private sector.”

Another increasingly frustrating problem for small businesses is their dealings with the public sector.  According to the survey a staggering fifth of small businesses were being made to wait for over 10 days to be paid for public sector jobs.

In such a harsh economic time, such a hefty wait can be an extraordinary pressure on a small business which needs to meet payments itself but can’t simply because it is waiting to be paid.

The private sector isn’t blameless either as a third of small businesses questioned are still being forced to wait even longer than that for their payment.

The public sector needs to help the economy, too.

Although the Federation announced that they were pleased to witness the Prompt Payment Code come into effect, they still believe that more effort and pressure needs to be placed on firms to pay up.

“We would like to see Companies House given sufficient power to penalise late payers in the commercial world while the Government must do more to ensure the public sector does its bit to help the economy,” continued Wright.

“The small business sector is a vital source of employment and turnover for the UK economy, especially during these tough times. But these figures show that there is still an avalanche of stumbling blocks stopping this vital sector from surviving and recovering.”

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