A barometer of the local economy
Clients often use me as a barometer of the local economy, asking about the general mood of local businesses and whether any particular sectors are generally faring better or worse. Whilst conditions are still challenging, particularly in certain sectors, I have enjoyed passing on a generally more positive message over the last 6-9 months.
I am encouraged that the more positive trend that I am seeing locally is mirrored by recent positive economic statistics and national news stories.
But what does all this mean for local family businesses?
Since UK family businesses account for over 30% of the UK’s GDP and employ over 9m people, family businesses have a big part to play in the recovery of the UK economy.
Family businesses are generally lower geared and more long-term focused than their non-family counterparts. They should therefore be well placed to invest for future growth and to take advantage of any upturn in the economy.
Current conditions for investment are encouraging. Interest rates look set to stay low for the foreseeable future. There are also good tax incentives for businesses to invest, with 100% relief available on the first £250,000 of qualifying items in both 2013 and 2014. The Research & Development tax credits & the new Patent Box rules are also beneficial for those companies investing in developing eligible new products. Relief on R & D expenditure can be as much as 225%.
With a backdrop of continued cuts in government spending and with consumer spending levelling out at more sustainable levels than we had prior to the “credit crunch”, commentators seem to agree that UK growth is likely to be at a relatively slow pace for the foreseeable future. In order to accelerate that growth, businesses therefore need to look at markets beyond the UK. Whilst many local family businesses do export their products and services, I believe there is a great deal of untapped potential.
The traditional core export markets of the US and EU look to have relatively low growth opportunities in the near future and so businesses would do well to explore opportunities in some of the fast growth so called ‘emerging markets’.
UKTI provides valuable support and advice to UK exporters, including organising trade missions, conducting market research, providing support for trade shows and providing local contacts. I have had some really positive feedback from clients using these services. Sensibly, the government seems to be committed to providing more support, offering new export lending guarantee schemes and insurance products where traditional bank lending may be inadequate.
However, I think the government needs to do more to encourage SME’s in particular to explore international opportunities. Communication about existing support services could be improved and access to export credit guarantees could be expanded. It would also be great to see the government taking up the CBI’s recent recommendation to offer a targeted tax credit to underpin exploratory export activity by SME’s. This could perhaps work in a similar manner to the R&D tax credit scheme.
At Lovewell Blake we have seen an encouraging increase in demand from clients for advice about setting up operations in new countries, or simply trading with them. I really hope that we see this trend continue, with some local family businesses leading the charge!
The Lovewell Blake Family Business Club holds informal events throughout the year, for more information call Steven Scarlett on 01603 663300.