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Small Businesses Request More Government Involvement In Boosting Economy

by Jim ONeil on October 4, 2011

in business loans

A double dip recession is threatening the UK, leading experts to forecast that the Monetary Policy Committee of the Bank of England will implement additional quantitative easing. According to the Federation of Small Businesses (FSB), this step is not enough. The group is requesting more governmental involvement to strengthen the economy.

Many businesses have been hit hard by the recession and some have been forced to close. Though cheap loans are available, lenders have strict approval criteria. In addition, many people feel it is better to pay down their debt than do any additional borrowing right now. Businesses are struggling to make ends meet in order to survive this weak economy, prompting the FSB to make its request.

FSB National Chairman John Walker feels that current government policies “are out of touch with reality.” He believes they will only work if consumer spending is higher and unemployment is lower. In the current sluggish economy, he thinks the government must increase its growth agenda and clearly illustrate its support of the business community.

Businesses are facing the same lending restrictions that home buyers are seeing with mortgage loans and those with homes are facing with remortgages. The housing market is filled with excess inventory but many people cannot become first-time home buyers due to tough lending criteria. Many homeowners are unable to consolidate debt and improve their homes because they cannot qualify for a remortgage.

Unless something changes, the economy will continue to flounder, believes the FSB. Low interest rates are nice but not nearly enough in this situation. The government must take a much more active role in assisting with the economic recovery. Otherwise, a double dip recession may be right around the corner. The second time around may be even worse than the first, fear some experts- a very scary thought.

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