Can Small Businesses Survive This Recession?

Tougher times are expected for small and medium sized business. Business failures are expected to rise by a staggering 50% which means that failed businesses could peak around 32,400 in 2010; this would be the highest level recorded since 1992. The Federation of small businesses said that they had recorded a dramatic increase of 214% in the amount of calls to their legal advice line on redundancies from concerned small businesses in the fourth quarter of last year.

Their members are concerned about jobs and how to hold on to jobs; small businesses are usually the last businesses to make employees redundant. The calls are asking how to make employees redundant, how do I do it, what action should I take, this is extremely worrying when it is thought that 32,400 business may go bust. On average each small business employees approximately 5 members of staff; this means that 150,000 people could lose their jobs from small businesses this year.

The federation of small businesses is the voice of small and medium-sized businesses in the UK; they have over 215,000 members, who employ more than 1.3 million people with a combined turnover of £10billion. The federation of small businesses are proposing a five point plan. They believe that small business can help to get us out of this recession if the government were to give small businesses more contracts, the government improves employment paperwork, government improves access to traineeships or apprenticeships and improves the position of the banks giving money to small businesses. This will rely on the bank mangers releasing and relaxing the money supply to small businesses and not having a knee jerk reaction to this recession. As quoted by Stephen Alambritis.

This government under Gordon Brown and Alistair Darling need to realise that small businesses are the back bone of the economy and that they need to ensure that this recession is as short as possible. To do this they need to spend copious amounts of money to implement a massive job creation programme to keep unemployment down and taxation revenues up. Then hopefully we may ride out this recession!

It's not just a case of the government supporting the Banks and the Car industry; we need more far reaching initiatives for employment across the economy. The recent incentive released by the government was to assist employers recruiting people who had been unemployed for six months or more. This initiative is flawed as the government will provide £2,500 to employers for training any new recruits as long as the new employee has been unemployed for more than six months. So now employers may be tempted to only recruit people who have been unemployed for six months or more for the additional money that is available.

Gordon Brown and Alistair Darling should look across the pond to Barack Obama's newest policy to create 3 million new jobs in America. This initiative is expected to cost some $850 billion to implement along with other help offered to their car industry and the banking sector.

Contributing author Mark Aucamp has been providing Talk Money Blog with regular Money Saving Expert advice and comments. Mark has extensive experience in providing Debt Management and Quick Mortgage Advice and solutions. He is recognised as an authority in the field of debt management and mortgage advice.