Businesses trying to escape the ‘Growth Trap’ press release

As unemployment figures reach a 17 year high, businesses in the UK are calling on the Government to offer more financial incentives to create jobs as lack of confidence in economic growth is hindering recruitment.

The jobless total has now reached 2.6million which has led to calls from UK businesses for the Government to act by providing the kind of financial incentives which could lift businesses out of the ‘growth trap’.
Many of the 1,000 businesses taking part in the research by Bibby Financial Services said they cannot take on more staff because of uncertainty in the wider economy and 34 per cent say financial incentives would help to stimulate job creation in areas of most economic need.

The results come shortly after Chartered Management Institute’s Future Forecast report which points to a pessimistic 2012 with 43 per cent of UK managers saying they are expecting further redundancies next year, and that 38 per cent feel insecure in their current jobs.
While businesses are keen to invest in more staff in order to build their business, they find themselves stuck in a ‘growth trap’ as they do not have the funds to take on more resources which they would need to grow their business.

And with just seven per cent of businesses blaming the lack of relevant skills and experience among potential employees, the survey suggests the greatest barrier to recruitment is confidence in the economy going forward, which 34 per cent cited as the main reason.
There is also concern about the new business pipeline with 30 per cent feeling uncertain about their own prospects over the next 12 months. In addition, one in four, 26 per cent say there is a lack of funding options available to enable them to recruit.

Edward Rimmer, UK chief executive of invoice finance specialist Bibby Financial Services, said businesses want to invest in new staff but need support from the Government to make it possible.He says: “Businesses in the UK are in a growth trap where they want to invest in their firms, take on more staff and see significant growth going into 2012 after many hard years of cutting back. “But those firms cannot make that step because they don’t have the level of business needed, so they will remain at a stagnant level. But if the Government stepped in, as previous governments have done in the past, and offered financial incentives for each new member of staff for instance, it would give the businesses that much needed support for real growth. “It is clear from our survey that businesses want to grow but have come up against a number of barriers which the Government could act to remove. Unless these businesses can find ways to invest in staff we will not see the growth from small and medium-sized enterprises that the Chancellor is hoping for.

“At the same time the financial services industry can play its part by making access to business funding much more open and clear. Our research has revealed that one in four businesses cannot find the finance they need to fund new staff, which suggests many business owners are losing out without being aware of all the options.

“At Bibby Financial Services we are working hard to connect with those businesses and have seen a significant increase in demand for our services over the past 12 to 18 months. But as an industry, there is still more that can be done to ensure that businesses do not fail because they were unable to access the funds they needed to grow their business''

Posted in Bibby Financial Services updates by Julia Legge on 20 December 2011.

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