The business secretary, Lord Mandelson, has unveiled a £20bn package to support small businesses during the recession, by boosting the availability of credit from the banking sector. The package means that the government will provide £10bn of working capital to customers with a turnover of less than £500m (a measure which could cover all but the largest 350 companies in the UK), and £1.3bn of loans for companies (particularly those in sectors which are seen to be vital in rebuilding the economy) with a turnover of up to £25m (Financial Times). In return for a fee the state will insure banks against companies defaulting on loan repayments (BBC).
One cause of this package was banks’ reluctance to lend to businesses, as they were afraid that, as the economy sinks deeper into recession, more companies would find it difficult to meet debt obligations (The Guardian).
As with a recent previous programme to help smaller business, Mandelson believes that this package will help steer businesses through this economic downturn into a stronger position once this climate is over (The Telegraph). However, many feel that £20bn is not enough to get the banks lending sufficient funds to help businesses get access to much needed cash, with members of the Conserative party stating that the figure should be £50 billion instead.
Friday, 16 January 2009
Government to guarantee £20billion loans to small businesses
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Thursday, 8 January 2009
£35 million to be invested in creating 23,000 jobs in the North West
Whilst speaking to business leaders at Salford's Lowry arts centre during, as part of the Labour Cabinet’s tour around the UK, Lord Peter Mandelson has today approved a £35m programme to support new businesses in the North West, with the aim of creating 23,000 jobs over the next five years, as reported by the MEN. The start-up programme will be run through Business Link Northwest, the region's business support gateway. The programme’s funding is coming from the Northwest Regional Development Agency (£26.6m) and the European Regional Development Fund (£8.4m). The programme aims to create some 12,700 new businesses and 23,000 jobs in the North West.
According to the BBC Mandelson said, “We cannot and must not fail now to invest in our future…We will not repeat the mistakes made in previous recessions of retrenchment - stop-go policies in public investment have reduced Britain's competitiveness over many decades”.
The MEN added that he said, “This new funding will help entrepreneurs in the north west to get new enterprises off the ground and access the support they need to grow and flourish. Nurturing and protecting start-ups and young businesses through this downturn will lead us into the upturn that will follow”.
Therefore Mandelson has made a clear message regarding his views on how to turn the current economic downturn into an upturn: We need to invest in the future, rather than sit back and wait for the economic downturn to end.
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