The Ernst and Young Item Club has today revealed the economic forecast for the UK is unlikely to improve this year. Despite the avoidance of a double dip recession, things will remain bleak for those working and living in the UK, with just 0.4 per cent growth expected during the remainder of 2012, and the national unemployment rate set to rise to a staggering 9.3 per cent by summer 2013.
However, the Item Club has suggested that the recovery of the “dismal” UK economy cannot be placed solely on the shoulders of the central banks – the Bank of England has already frozen interest rates at 0.5 per cent and increased its quantitative easing programme to £325bn this year alone. Instead, chief economic adviser to the Item Club, Professor Peter Spencer, suggests that it is now time for commercial property businesses to invest in the country if they wish to reap the success of a booming economy further down the line.
He says “Business investment has picked up nicely in the US, but UK companies remain extremely risk-averse, which is sapping strength from the economy.
“Until these companies stop stashing the cash and start increasing levels of investment and dividends, the economy will remain on the critical list.”
His claims are reinforced by the study undertaken by the Item Club, which states that “while the wider economy is bumping along, UK corporates remain in good shape and have continued to stockpile cash on their balance sheets at an accelerating pace.” Essentially, then, larger companies should be investing into local communities and pioneering schemes to get the economy moving again if they wish to remain successful aspects of the UK economy.
Perhaps one way larger companies could tackle the wilting UK economy is by tackling the rising unemployment crisis currently holding households in the country in a vice-like grip. As previously mentioned, the unemployment rate nationwide is forecast to hit 9.3 per cent in the middle of 2013 – this would mean that almost three million people, of working age and ability, could potentially find themselves out of work.
By investing in commercial property, big businesses could kick start the UK’s recovery in terms of the international economic marketplace. Creating jobs for local people would mean that the average working person would have more disposable income, leading to them being able to purchase non-essential, costly items such as electronics and property.
Also, as the UK export industry excelled in the past year, with the volume of goods exported up by 5.1 per cent in 2011, this could be an ideal opportunity for manufacturing companies such as Rolls Royce and JCB to expand their commercial property portfolios, combat unemployment and raise their prestige on the international platform in a single move.
With economic uncertainty hovering like a black cloud over the UK for the past few years, it has now become clear that there is no quick fix to get the UK back on its feet. However, with Mary Portas’ high street regeneration plans approved by the government, grants will hopefully become available for small business owners and entrepreneurs to expand their businesses and gain a foothold on the commercial property market, especially in the retail sector. This move would be welcomed by towns and cities badly affected by the fall of high street trading, such as Nottingham and Stoke on Trent, where high percentages of retail commercial properties remain unoccupied.
Perhaps if the entrepreneurs and business owners of this country loosened the purse strings and invested a little in the struggling economy, they could both reap the benefits of a boom time and help put the “Great” back into “Great Britain.”
Are you a small business owner attempting to expand your premises? Or, alternatively, do you wish to start your own business but have no idea where to begin? Take a look at the Movehut website for great advice on how to buy or rent an ideal commercial property for your company.
