Economic downturn has bottomed out in Hunts, say business leaders
THE economic downturn has bottomed out in Huntingdonshire, business leaders believe – but the personal debt crisis may still have a long way to go. John Bridge, chief executive of Cambridgeshire Chambers of Commerce, said the local economy reached its low
THE economic downturn has bottomed out in Huntingdonshire, business leaders believe - but the personal debt crisis may still have a long way to go.
John Bridge, chief executive of Cambridgeshire Chambers of Commerce, said the local economy reached its lowest ebb in the first quarter of this year.
"It has stabilised since then, but at a low base. It has been quite challenging for some companies," he told fellow business leaders last week at a meeting organised by Huntingdon MP Jonathan Djanogly.
Yet Huntingdonshire had been comparatively fortunate, compared with other areas of the country, and some firms had weathered the downturn well, Mr Bridge added.
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The key challenge now was for the business community to work together to succeed in recovery. That included the derided banking sector, which remained a key player in backing expansion.
"The banks are essential. We cannot succeed without them. But it's very unfair that some of the banks that created the problems are imposing on smaller businesses by passing on their costs."
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Some of the banks seemed to be sitting on cash intended for business finance in order to repay huge Government loans, he added.
"It's essential that money is made available for small companies to invest."
Procurement by the public sector could offer opportunities to small companies, but each organisation required firms to pre-qualify before being allowed to tender to supply goods or services, and every organisation used a different pre-qualification questionnaire.
The chamber has been working with the East of England Development Agency in the hope of streamlining the process with a single PQQ for the whole region.
Another major opportunity lay in export markets, with the value of sterling making UK goods and services quite competitive, Mr Bridge said.
But the biggest obstacle to recovery was the huge debt built up by the Treasury, estimated at �180billion by the end of the year.
"There are going to have to be quite significant cuts in public expenditure, and tax increases. We must ensure small and medium-sized businesses are not penalised, because tax generated by small businesses is the only way we get the revenue to fix the [national] problem."
Malcolm Lyons, Huntingdonshire chairman of the Federation of Small Businesses, agreed that the recession had bottomed. He called for a reduction in the VAT rate for building work to help kick-start the construction sector, which includes huge numbers of small firms, and for banks to allow local managers to make local decisions about financing client companies in the emerging recovery.
Mr Djanogly agreed that the local economy had stabilised after a traumatic year, but personal debt was still getting worse. "It has not yet bottomed, and people are very worried about their personal and family circumstances."
Although there was consensus that the worst was over for business, "that's not to say things are good or that there are green shoots popping up all over the place," the MP said.
There were differences between Huntingdonshire and places such as London in the effects the recession had had. In the capital it had impacted on people from all walks of life and at all levels, he said. Here it had impacted overwhelmingly on people with low incomes.
He had received a lot of letters from companies complaining about tougher terms of trade, such as extending bill-settlement arrangements, and he urged the Government to ensure that cash earmarked by the Bank of England for lending to business actually reached firms.
Mr Djanogly said he was disappointed that full advantage was not being taken of the opportunity offered by the recession to provide skills-training for the recovery. The Government's failure to find the �40million needed for Huntingdonshire Regional College's move to Hinchingbrooke was a particular concern.
However some in the Huntingdonshire business community are worried about a second phase to the recession.
"If, as soon as things start to pick up, we go back to the sort of credit-fuelled behaviour that caused the crisis, interest rates and inflation will start to rise rapidly and we shall soon be back where we started from," one of them told The Hunts Post.
Mr Djanogly took some clear messages from the business community about what it would expect from a future Conservative government - less regulation or different regulations for small and large companies, VAT payment deferral, insolvency and employment tribunal reform, automatic business rate relief for qualifying firms, and more streamlined planning processes.
He said after the event: "It does seem that, as a region, we have been coping relatively well during this difficult period, and that is testament to the number of healthy businesses that we have locally. I was very grateful to receive comments from businesses, not only from a local perspective but also to identify the key issues for what I hope will be an incoming Conservative government in 2010.