Daily Archives: April 14, 2016

Bank of England warns Brexit could do serious harm to UK economy | Business | The Guardian

April 14, 2016 By in Brexit, Business Administration, Defense Policy, Economics, Education, Energy Policy, Fiscal Policy, Foreign Policy, Growth, Healthcare, Immigration, People, Politics Tags: , , , , , , , , , Leave a comment
The Bank of England in Threadneedle Street, Lo...

The Bank of England in Threadneedle Street, London. Deutsch: Sitz der Bank von England in der Londoner Threadneedle Street. (Photo credit: Wikipedia)

The Guardian reports that interest rates are kept at 0.5% as latest MPC minutes reveal significant concerns about effect on the economy of leaving the EU.

Source: Bank of England warns Brexit could do serious harm to UK economy | Business | The Guardian

For me, the intellectual case, in terms of economics, politics and risk minimizing, is overwhelming in terms of staying in the EU. The Brexit argument is lightweight, lacking in hard numbers and risk assessment – in short it’s fluffy and just based on political dogma.

Let’s kick the Brexit campaign into touch before people get seriously hurt by the economic implosion.

Thoughts?

 

Lending to SMEs and entrepreneurs is improving, but more diverse forms of financing are needed – OECD

April 14, 2016 By in Accountability, Austerity, Business Administration, Central banks, Economics, Euro Crisis, Fiscal Policy, People, Politics Tags: , , , , , , , Leave a comment
English: The logo of the Organisation for Econ...

English: The logo of the Organisation for Economic Co-operation and Development (OECD). (Photo credit: Wikipedia)

This is an important new report published by OECD. It highlights that financing for small and medium-sized enterprises (SMEs) has turned the corner from the downswing seen during the global financial crisis, but overall credit conditions remain challenging and access to external finance continues to be much tighter for SMEs than larger firms.

Source: Lending to SMEs and entrepreneurs is improving, but more diverse forms of financing are needed – OECD

I was disappointed that the report was not more critical of the major banks who despite all sorts of inducements have failed to leverage loans to SMEs. This is important because typically SMEs generate new jobs more quickly than larger firms.

What the report highlighted for me was the importance of government guarantees. Significantly, France with a socialist government and generally not friendly to entrepreneurs, we find surprisingly high government guarantees. By comparison, in the UK and Southern Europe government guarantees for SMEs are negligible. Part of the problem seems to be the monetary policy and fiscal policy are not coordinated effectively.

In my mind SMEs generally get a raw deal compared to big business. Big business has more effective political lobbying. Governments seem to rely on intermediaries in dealing with SMEs. Most importantly, there seems to be an absence of an effective industry strategy.

Thoughts?