Upbeat message on the economy

Steve Hughes of the British Chambers of Commerce
Steve Hughes of the British Chambers of Commerce

ANOTHER crunch year is approaching for businesses in 2012 when the banks face a ‘crucial test’ of refinancing pre-credit crunch loans.

That’s the view of Steve Hughes, economic advisor to the British Chambers of Commerce, who spoke to business leaders in Newport Pagnell on Wednesday, December 1.

Mr Hughes gave the latest quarterly economic snapshot at the annual meeting of Milton Keynes and North Bucks Chamber of Commerce at the De Vere Harbon House, saying there are a number of barriers to growth in the economy.

The presentation he gave was generally upbeat, saying that “there are difficulties but grounds for optimism.” He added that the UK has emerged from the “worst recession since World War Two.”

Of the three barriers to growth he cited, the second was ‘refinancing’. Mr Hughes said: “2012 will be a crucial test. Three year term loans and five year loans will be coming up for refinancing.” He said the BCC was working with the British Bankers Association to ‘work out’ issues during 2011.

Mr Hughes claimed that banks’ relationships with businesses, as revealed by the chamber’s surveys, showed a mixed relationship between lenders and firms. He called it a ‘disparate picture’.

He said another barrier to growth was the situation in bailed-out Ireland and what the markets thought of Portugal and Spain. He said British companies ought to export more to new and emerging markets, like Brazil, Russia, India and China but recognised ‘cultural issues’ sometimes got in the way.

Another barrier is in skills shortages, but he thought government had listened to businesses that needed to bring in foreign workers to carry out critical tasks.

Within the UK, Mr Hughes said the coalition government had made a good start in maintaining infrastructure spending but increases in National Insurance and VAT next year would restrict spending. He added that ring-fencing health and education spending would keep taxes unnecessarily high.

He said: “The government has made a great start but needs to be held to account.” He added there was a risk that the politicians would start to make expensive promises the closer the country comes to a General Election.

Overall he added that the economy is in a “pretty decent state of health.”