stimulating growth

Stimulating Growth in the Economy

It is reassuring to see references to “growth” emerging in political speeches instead of the constant mention of spending cuts. The economy desperately needs to grow in order to generate wealth and create employment.

Although nobody can question the need to cut back on public expenditure, opinions are split to whether the cuts are “too much too soon”. The economy is already very fragile and the real impact of the cuts is still to be felt. Q4 saw an unexpected fall in GDP, partly attributed to the snow but economic output was significantly less than predicted.

Whilst growth is certainly needed, it is unclear from where the demand for products and services necessary to stimulate growth will come. Especially, considering that unemployment is high and still rising. Exports are a possible answer but we mainly export to countries also struggling economically. In contrast, the emerging giants – India and China – tend to export to us.

And there is the thorny issue of funding growth when the banks are still reluctant to lend. Most SMEs – the relatively small businesses which form the backbone of the UK’s economy – are finding it almost impossible to raise affordable finance.

It all points to a tough and uphill struggle for quite some time before the country is back on its feet.

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