There has been significant debate over how to overcome the current economic woes in the UK. The government sought to stimulate the economy through quantitative easing last month with limited success.
The importance of small business has been overlooked as SME’s account for almost half the UK economy and half of the employment in the private sector. The government should therefore seek to direct its resources to stimulate small businesses who, in turn, will drive the economy out of recession. At present, small and medium sized businesses are struggling to obtain finance from the banks and this is stifling growth in the UK.
Recent proposals to encourage the private sector to issue bonds does have some merit as this will reduce our reliance on the greedy banks. However it will be difficult to implement such a scheme and it is expected that only larger corporations will be able to successfully issue bonds. Tesco have recently encountered difficulties in launching their own mortgage scheme which provides an indication of the difficulties involved.
Perhaps we will come to rely on some of the larger Utilities companies and pension funds to issue Bonds to the private sector and to stimulate the economy.