BUDGET WARNING AS BUSINESS START-UPS FALL BACK

Scot-Buzz editor Bill Jamieson says one sure sign of a reviving economy is a rise in business start-ups. But there is little cause for cheer in the latest figures. While last year got off to a promising start, the final three months brought a marked downturn, so that 2012 ended with a fall in new business numbers.

Detailed figures from the Committee of Scottish Bankers showed new business start-ups across the country totalled 13,856. While an increase of any sort is an achievement given that the economy barely marked time over the year, the figure was down from 14,737 in 2011, a fall of six per cent.

The statistics are based on quarterly data on new business start-ups based in Scotland that have opened accounts with  Bank of Scotland, Clydesdale Bank, Lloyds TSB Scotland and Royal Bank of Scotland.

Biggest falls were recorded in construction, down by 15 per cent, from 1,757 start-ups in 2011 to 1,490. And the property sector saw a 22 per cent slump, from 4,545 start-ups to 3,538. Wholesale and retail too, was hit, with new business figures down 9.5 per cent, from 2,208 to 2,007.

But there were some surprise bright spots in the figures. Manufacturing saw a 13.5 per cent rise in start-ups, from 719 to 816, hotels and restaurants recorded a rise, as did recreation and personal services, where new business starts climbed 18 per cent from 1,777 to 2,099.Analysis by geography showed Glasgow start-ups down from 1,570 to 1,469, while the Edinburgh total fell from 1,524 to 1,402.  

The figures come with the UK budget just a week away and amid mounting pressure on the chancellor to act boldly in cutting business taxes as well as making good some of the earlier cutbacks in capital spending. But the “no alternative” speech by David Cameron last Thursday seemed to dash hopes that the budget will do much for enterprise. Cameron seems to have forgotten that while invoking the defiant rhetoric of Margaret Thatcher in back in 1981, she was well served by a chancellor (Geoffrey Howe) who introduced enterprise zones and cut business taxes.

Said CBI Scotland’s assistant director, David Lonsdale on the start-up figures, “Scotland badly needs more businesses to start and grow if it is to become a more dynamic and successful economy that creates wealth and jobs. “This data reinforces the need for government at all levels to prioritise policies which promote business investment, growth and exports and which keep a firm lid on costs such as taxes and red tape.”

While 2013 is likely to have got off to a slow start, a return to recession looks to have been avoided and there are encouraging signs of improvement which should augur well for the enterprise sector in due course.

Upbeat signals in the past week include:

• Retail sales grew at the fastest rate of growth in three years according to the British Retail Consortium
• Sales of new cars rose for the 12th consecutive month in February, boosted by manufacturers' deals, according to data from the Society of Motor Manufacturers and Traders (SMMT)
• The FT reported that UK Chancellor George Osborne's budget will underscore the case for monetary activism to boost growth, setting the scene for “a new era of looser monetary policy” under incoming Governor Mark Carney (this is high-falutin’ code for another £25 billion blast of monetary easing known as QE)
• The UK service sector expanded for the second consecutive month, driven by a rise in business confidence, according to survey data.

David Lonsdale’s message is echoed in the barrage of advice sent out over the weekend from Britain's business organisations in their Budget wish-lists. The CBI (UK), the British Chambers of Commerce and the manufacturing organisation the EEF are all urging the government to unleash billions of pounds of infrastructure projects, particularly house building.

Woe betide him (and us) if the budget is another miserable debacle akin to last year.