SMEs, don’t expect any favours from the coalition

Do your aspirations as a citizen differ from those you hold in business? Did your vote for the former contradict your desire for the latter?

In business we are against things that impede our journey along the road to recovery. As citizens we dislike action that undermines the effectiveness of public services. Potentially, we are confronting a period in which we have to accept both negatives.

Few people doubt that bailing out the financial sector and the recession have combined to make big government unaffordable and that the deficit must be reduced. The issue now is whether this can be accomplished without making the road to recovery so steep that our progress will be arrested.

As a business person, you may argue that the government’s task is to create an economic climate that boosts growth. Basically this means encouraging investment and somehow dissolving the reticence of banks to lend at affordable rates of interest. It also means not imposing additional operating costs (especially increases in fixed costs) and not dampening demand.

None of the contenders for political power demonstrated policies – or intentions – that addressed this agenda with the confidence and authority needed to inspire the business constituency.

Now we hear that the largest initial cuts, some £900m, are to be imposed on the Department of Business, the ministry charged with stimulating, motivating and directing economic activity.

To prosper after a period of turbulence, real businesses require real policies that are actionable immediately. Good words alone from Messrs Cameron and Clegg about change and stable government are unlikely to remove from the minds of managers uncertainty as to whether their business can develop in this environment.

Perhaps we should argue that the way in which we balance the country’s books is too important to be left to politicians. The narrower constituency of small and medium-sized businesses that comprise the mainstay of the economy should be given a stronger voice.

After all, when you add together the number of people whose livelihood is dependent on the SME sector it is a significant fraction of the electorate.

This leads to my second point. Will the political bargain made to form a government benefit SMEs?

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