Budget Probably a Step in the Right Direction ; John Endacott, Tax Partner at Truro Accountants Winter Rule, Analyses the Budget's Potential Impact On Business Investment in the South West

Summary

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The recent South West economic survey by the Institute of Chartered Accountants showed a fall in capital investment during 2010, and reported that 29 per cent of businesses were finding access to capital a greater challenge than a year ago. This is very bad news if our local economy is to grow and new jobs are to be created. Why is this? Well - 1. The banks are lending less freely than two years ago and see more propositions that are put before them as 'equity propositions' particularly with insufficient (land based) security to underpin the borrowing requirements. 2. Although private equity funds are currently sitting on Pounds 300billion, they're not very interested in the South West marketplace as it is seen as too remote with a poor transport infrastructure.

3. There continues to be an equity gap ie, a range of capital requirements for a growing business that can't currently be filled by existing equity providers of "friends, family and fools", business angels and venture capitalists.

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Extract

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Budget Probably a Step in the Right Direction ; John Endacott, Tax Partner at Truro Accountants Winter Rule, Analyses the Budget's Potential Impact On Business Investment in the South West

The problems with the banks are well-known and while "Project Merlin" (the deal struck between the Government and largest UK banks on lending, pay and bonuses) is meant to unlock some more debt ...

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