Glass half full?

In an ideal world every small business is planning ahead but needs some clarity and certainty about the future economic environment in which it is likely to be operating.

The reality, however, is more like an exercise in crystal ball gazing.

Business headlines portray a rosy picture of the UK economy back to pre-Great Recession levels of performance which is underpinned by unemployment falling dramatically. It should however be remembered that we are already in the build-up to the next election, now less than a year away.

Other commentators who are not getting the headlines are promoting a level of caution that no one wants to hear. We have had quite enough bad news over the past 6 years and now want some good news.

It may however be unwise to be unaware of the warning from IMF Chief Christine Lagarde, that financial markets may be a little too optimistic, given that recovery is still lagging in Europe, one of the UK’s chief export markets.

It would also appear that not everyone is enjoying a boom if the reports are correct about UK businesses being in arrears with VAT, calculated as having have risen by £100 million to £2.6 billion in 2013, according to business finance provider LDF.

The Bank of England’s Monetary Policy Committee is also concerned about signs of a weakening in growth in the second half of the year, pointing out also that real wage rates have not yet started rising, while inflation is edging up.

We should know that economic forecasting is by no means a precise science, and if we had forgotten 2008 was a big reminder that chancellors of the exchequer cannot ensure there will never be a return to “boom and bust” economics.

Business planning needs to take into account confidence or lack of it. Hope and spin are not much help to the small business deciding whether to seek funds to invest in the future or avoiding taking risks.

So, apart from continuing to keep a close eye on cash flow as a prudent measure, is it time for businesses to plan for growth? And who is going to back them by sharing their risk?

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