UK firms told to invest profits
By Matt Falloon and Fiona Shaikh |
October 26, 2010, Tuesday
|
Print Edition
Print Edition
BRITISH Prime Minister David Cameron yesterday urged companies to use more of their profits to expand and promised to do more to get bank lending flowing to smaller firms as huge cuts in public spending begin to kick in.
Cameron, speaking to business leaders in London, was seeking to switch the focus of debate on the economy to growth after unveiling cuts last week which some analysts say could cost almost a million public and private sector jobs by 2014/15.
"British businesses are rebuilding their balance sheets because they have relatively strong profit and loss accounts," he said. "If we are to get back to strong growth, these profits need to turn into productive investment."
The Conservative-Liberal Democrat government, in power since May, unveiled the details last week of departmental spending cuts totalling 81 billion pounds (US$127.3 billion) over four years - part of its effort to all but eliminate a record budget deficit.
Some economists have warned that such severe cuts could drive Britain back into recession, given broad signs of a slowdown after a strong rebound at the start of this year. Economic growth figures for the third quarter today are expected to show a marked slowdown from the 1.2 percent growth seen in the previous three months.
Cameron said the government's austerity plans, which have helped to drive long-term borrowing costs down to record lows, should give businesses the security they needed to invest.
"We've got to back the big businesses of tomorrow, not just the big businesses of today," Cameron told the Confederation of British Industry's annual conference. "That means opening up access to finance, creating an attractive environment for venture capital funding, getting banks lending to small businesses again and insisting a far greater proportion of government procurement budgets are spent on small- and medium-sized firms."
Cameron, speaking to business leaders in London, was seeking to switch the focus of debate on the economy to growth after unveiling cuts last week which some analysts say could cost almost a million public and private sector jobs by 2014/15.
"British businesses are rebuilding their balance sheets because they have relatively strong profit and loss accounts," he said. "If we are to get back to strong growth, these profits need to turn into productive investment."
The Conservative-Liberal Democrat government, in power since May, unveiled the details last week of departmental spending cuts totalling 81 billion pounds (US$127.3 billion) over four years - part of its effort to all but eliminate a record budget deficit.
Some economists have warned that such severe cuts could drive Britain back into recession, given broad signs of a slowdown after a strong rebound at the start of this year. Economic growth figures for the third quarter today are expected to show a marked slowdown from the 1.2 percent growth seen in the previous three months.
Cameron said the government's austerity plans, which have helped to drive long-term borrowing costs down to record lows, should give businesses the security they needed to invest.
"We've got to back the big businesses of tomorrow, not just the big businesses of today," Cameron told the Confederation of British Industry's annual conference. "That means opening up access to finance, creating an attractive environment for venture capital funding, getting banks lending to small businesses again and insisting a far greater proportion of government procurement budgets are spent on small- and medium-sized firms."
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