Economy improvements move into sight

Johnson Reed
2m read

Could it be at long, long last, our fragile economy is set to turn the very slow and tortuous corner that we’ve all been experiencing over the last few years? Perhaps we are now on course for a brighter future.

In amongst the detail of Chancellor George Osborne’s Budget this week, and the inevitable media fury over the proposed ‘granny tax’, there lay a concurrent piece of Good News that may be an indicator for a new direction for the country.

Yes – drugmaker GlaxoSmithKline is going to spend some money in the UK. Good news indeed, and perhaps indicative of a more widespread boost to our beleaguered economy. The company has said that it’s going to invest £500m in manufacturing, creating 1,000 jobs in the process. They are going to commit to building a new factory at Ulverston in Cumbria, as well as investing yet more money into its two Scottish sites – a decision they say was influenced by tax cuts confirmed in the Budget.

This bodes well for the confidence that’s been lacking in the economy since the onset of the world recession. And it follows hard on the heels of the prediction in February 2012 by the Finance and Leasing Association (FLA) that finance providers are showing a new optimism about lending to small businesses.

In their well-respected quarterly Confidence Survey, the FLA says that leasing is a cost-effective way of investing in new equipment while protecting cash reserves. Leasing is the third most popular source of credit for business, after bank overdrafts and loans.

In spite of the fall in GDP in the final quarter of 2011, the survey shows that 72% of respondents expect economic conditions to show a slight improvement over the next twelve months, compared with 70% in the previous quarter.

Geraldine Kelly, Head of Research and Chief Economist at the FLA commented:

The cautious optimism shown in the survey reinforces our message to the government that asset finance has a key role to play in improving the supply of credit to SMEs. Asset finance helps small businesses get the equipment they need to compete in tough trading conditions. It is an affordable alternative source of finance for a huge variety of products and equipment.

So as we sit here at Johnson Reed, ‘cautiously optimistic’, we can’t help wondering whether the next phone call we get might just be from GlaxoSmithKline in Ulverston, saying that the £500m they’ve earmarked isn’t quite enough… so they spoke to their bank… and the bank said “NO”… and could we help them? Now that would be a better future, especially for us.