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Extension Of Scottish Enterprise FundThe programme designed to support academics developing commercial businesses by allowing them to spend time developing their ideas are to be extended and a further £5.5 million over the next five years. The program includes the provision of business training and mentoring and advisory services from the Scottish Enterprise Network. A total of 18 fellows have completed the programme with a further six now being undertaken. It is planned to create a further 80 fellowships. The Deputy Chairman of Scottish Enterprise, Professor Neil Hood commented: “ Enterprise fellowships have very quickly proved their worth as a way of converting innovation into businesses, and we are very pleased to be funding the second phase of the programme”. Late Payment ActionNigel Griffiths, the Small Business minister, has announced that planned measures to improve he payment cycle to businesses are to be brought forward by three months. From 8 August 2002 businesses will be able to claim reasonable debt recovery costs without having to go to court. Griffith reported that there had been a fall of almost 7.5% in the percentage of payments that are reported as being late by the businesses that they surveyed. Investors in PeopleThe CBI has praised the Investors in People scheme as the best tool available in the UK to help develop skills in the workplace. The CBI wants the Chancellor to extend tax credit measures in the Budget to SME staff training, believing that this would help more small companies to take advantages of the benefits of the scheme Enterprise BillAn enterprise bill has been laid before Parliament. The Trade and Industry secretary, Patricia Hewitt, commented that: “The bill empowers consumers and honest businesses by establishing more effective consumer protection. Unfair competition damages honest businesses as well as consumers”. She went on to say, “Strong competition and consumer protection are vital if UK businesses is to get to the future first”. The Bill concentrates upon measures to remove unfair competition by making it a criminal offence to set up a cartel as well as giving consumers further protection by allowing consumer groups to request investigations into companies and markets by the Office of Fair Trading. The Bill also includes legislation to reduce from three years to one the restrictions on bankrupts who have been proven to have behaved honestly. In addition the Crown’s preferential rights to recover unpaid taxes ahead of other creditors will be abolished. Banks and SME’SThe Chancellor has announced that measures are to be introduced to improve the way the main clearing banks handle their SME customers. The Government has accepted in full the findings of the Competition Commission report on the supply of banking services to SME’s. The Commission found that a complex monopoly existed in the market leading to overcharging of SME’s though it found no excessive pricing to SME’s in Scotland. The main complaints of SME’s to the commission were: · A pricing structure that in general paid no interest on current accounts · Insufficient free banking services · Excessive prices and profits · Reliance on apathy to avoid switching between banks · Underperformance in dealing with errors and complaints The Commission believes that it will take two to three years for the clearing banks to implement the changes necessary to improve their services in line with its recommendations. Bank Of England – Interest RatesThe Monetary Policy Committee kept interest rates at 4%. The monetary policy committee was upbeat about the state of the UK economy, and this combined with its view that the global economy appeared to be recovering quicker and earlier than anticipated, could give credence to those analysts predicting an earlier rise in UK rates than was being previously anticipated. Strong consumer spending continued house price inflation and the beginning of more positive news for UK manufacturing are all being cited as reasons for a possible early rise in rates. TUC Reaction to Interest Rates MaintenanceCalls from UK manufacturers for a reduction in interest rates fell on deaf ears this month. The general secretary, John Morris, criticised the decision of the monetary policy committee, stating: “We are disappointed that the Bank did not use the economic room it still has for a cut. This excessive and persistent caution will mean manufacturing will take longer to recover and the economy will grow more slowly than it needs to”. UK Labour MarketThe number of people claiming unemployment benefit fell by 5,000 in February to 947,200. The government’s preferred measure, which includes those who do not claim benefit, rose slightly to 1.53 million. Average earnings growth fell to 2.7%, suggesting that inflation will remain subdued in the short term. House PricesA survey from the Halifax reveals that house prices in January averaged more than 16% higher than for the same period last year. The average house in the UK now costs £101,980. However, a spokesman for the Halifax stated “We continue to expect strong UK economic growth and rising unemployment will result in an easing in house price inflation over the course of 2002”. Institute of Directors (IOD) – Government Transport Policy An IOD survey has revealed that just one in ten directors surveyed felt that the problem of road congestion in the UK was being effectively handled by the Government. Directors were particularly critical of the road network and the organisations set up to run them and the contradicting message from the Government on the proposals on congestion charging. European Central Bank (ECB) ForecastsThe ECB’s leading economist Otmar Issing that believes the low point in the Eurozone’s economic cycle is now past and that recovery can be expected to speed up in the second quarter. He did warn that there remains uncertainty over the strength of the economic upswing this year. European economists are interpreting Mr Issing’s statement as implying that the ECB would probably follow any move by the American Federal Reserve to increase short-term interest rates. It is however likely that any ECB adjustments would be slower and less dramatic than those of the USA. Issing insisted that economic recovery would not be dependent upon a strong US recovery or be export led, but rather would arise from strong domestic demand supported by increased disposable income. Temporary EmployeesProposals previously reported in the financial update to give agency, part-time and temporary workers the right to similar pay, holidays and pension rights as permanent members of staff are to be put before the European Parliament and Council. The Commissioner for employment insists that the new rules will be flexible to complement national systems. However, the legislation if enacted in the UK is likely to fuel widespread opposition, particularly in already hard pressed industries such as agriculture and the hotel industry, which are heavy users of temporary short-term employees. IMF ForecastsThe IMF is reported as having revised its economic forecasts in light of the current economic climate. It is believed that the IMF now forecasts that UK growth will be 1.8% this year and 2.8% in 2003. It forecasts USA growth of 1.4% this year with a strong recovery to 3.8% in 2003. The Eurozone is forecast at 1.2% this year and 2.8% in 2003. The outlook for Japan it believes is still bleak, with recession forecast for this year and only a 0.8% increase in 2003. European Central Bank (ECB) RatesThe ECB maintained interest rates at 3.25% as expected, reflecting its confidence that the Eurozone economy was in recovery. Wim Duisenberg, the ECB president stated that economic data increasingly pointed to better economic conditions in the 12-nation Eurozone and that there were growing indications of the recovery of the global economy. |