Ignore the macro-economics, focus on your product
The recent much publicised problems in the Eurozone are likely to persist.
The political difficulties in persuading the Germans to print money will ensure that the current uncertainties will not be resolved in the short term. The likely result of this is a prolonged period of uncertainty in the Eurozone which will likely tip the region into recession. As the Eurozone provides over 50 per cent of our export trade, this is likely to have a serious drag on the UK economy.
I think we’ll see growth of 0.5 to 1 per cent next year, so we’re looking at extremely sluggish growth that can’t keep pace with inflation, so the squeeze on real incomes is going to continue.
The good news is that people are reducing personal debt, our government is reducing the deficit and we are managing our economy in a manner that has the confidence of the markets. Consequently, UK long term debt is at historic low levels providing vital support to the economy.
My advice to business owners would be to ignore the macro-economics. Concentrate on your own product in your own sector and focus your efforts on getting the product quality right and keeping costs under control. Focus on improving cash flow and resist all efforts to allow debtors to extend their terms.
Tony Medcalf, tax partner, Moore and Smalley