But many perils remain. There’s the danger of currency contagion from the eurozone, geopolitical risk around Korea and Israel, BP wrestling to plug the oil hole in the gulf which otherwise may decimate UK pension funds, and the UK government’s attempts to plug the budget tax hole, balancing the books without wrecking enterprise culture.
Change is good and welcome, but changing the goal posts on long term investments risks instability. The government is wrong to believe that taxing assets and income differently amounts to giving people a legal loophole. People need appropriate, stable rules to invest and take angel, venture or entrepreneurial risks.
That said, the anomaly that created serial buy-to-let landlords deserves to be closed. Too often has it been far easier for a qualified professional to play Changing Rooms or Location Location and renovate/flip property than do actual real work. Similarly, it has always been gutting for start-up entrepreneurs that the ability of the average homeowner to raise money against their house far outstrips that of a businessperson to raise bank loans or angel cash to build a genuine business that might create employment or value above a few bricks of clay.
The initial pruning of £6.2 billion in government spend (even before the Chelsea flower show started) is a sign that Prudence has returned to Number 11. First cards have been played, department budgets chopped and recruiting freezes put in place across the civil service, resulting in a sudden disappearance of dedicated Sunday recruiting supplements, and a wave of Linked-in updates announcing imminent redundancies. Quangos are looking rather nervous, like Thanksgiving turkeys, before the imminent emergency Budget. Many are ripe for the chop, having spent most of their money on rents for shiny commercial property, expensive IT systems, branding, PR spin and high-price conferences, rather than delivering the grants or support that was their original function.
Many useful ones though are under threat, such as regional development agencies which support R&D or projects that are essential for small businesses. Whilst some of their functions could probably do with a trim, or consolidation into the more centrally organised Technology Strategy Board, the local activity of RDAs has performed an essential role for grass roots business, employment clusters, and more significantly gaining matched funding back from the EU to claw back our annual contribution that previously went to funding farms on the continent. The net economic impact of RDAs has far exceeded base budgets. In any case total RDA funding remains negligible compared to say US cleantech funding under the Obama administration which has released billions of dollars to nurture and grow US cleantech enterprise.
Businesses ultimately have a choice to where they locate majority operations, for tax, incentive or skills, so much rests on whether the UK can manage an austerity budget that gets rid of years of overspend, but maintains momentum for business.
No doubt until Budget decisions are made, and the new investment landscape stabilises, we can always just play with Google’s Pacman applet (which wasted $120 million in productivity when it was placed as the search engine’s home page) or continue to watch trivia such as Britain’s Got Talent or play Sudoku – both of which are probably the real reason UK productivity and GDP fell, rather than anything fundamentally wrong with UK business.
