The jury is still out, although it seems
clear that the current Chancellor appears to favour the former.
As I type this, a survey from the Institute of Directors (IoD) has just been released,
which is critical of the Chancellor’s ‘belt tightening’ policies. Sadly, the IoD members conclude that the
country will still be in recession at the end of 2012.
Whether that will be the case remains to be
seen but as the Labour PM, James Callaghan, admitted in 1976, additional
spending only worked by injecting a bigger dose of inflation into the economy,
followed by a higher level of unemployment. At the moment both of those factors are just
about under control and no one wants them rise.
Much of the capital injected into the
banking system through quantitative easing has ended up there – with the banks…which
has increased their capital base significantly.
In spite of claims that lending has
increased, small businesses are still not getting the funding they require. A recent Bibby Financial Services survey
suggested that less than one in ten small businesses
succeeded in gaining finance from their Bank. Could it be that banks are not lending
because they have hidden liabilities?
Posted on behalf of Advisor Angus.
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