Government announces credit and investment schemes

The government is seeking to absorb criticism of its planned rise in business rates by investing in measures to get the economy moving.

Britain’s biggest retailers have expressed concerns about the proposed 5.6% increase in business rates – based on September’s retail price index measure of inflation – which is set to arrive in April. According to the British Retail Consortium (BRC), this could cost British stores £350 million at a time when many retailers are battling against adversity.

Electrical retailers Comet were recently sold for a nominal fee on account of mounting debts, while maternity store Mothercare also announced heavy losses. Research by Experian Football suggests that consumer retail activity has fallen by over 3% on last year, while research commissioned by the BRC calculates sales to be down 7.5% in Greater London on a year ago.

The BRC director of regulation, Tom Ironside, said that the system for business rate rises needed to be "a much more stable, much more predictable escalator" for retailers. The BRC also hope that the minimum wage can be kept sustainable and under control.

The government, for their part, have announced that the austerity plans must be adhered to if the UK is to maintain its strong credit rating. Growth estimates have been dropping recently as economists forewarn of a double-dip recession.

Plans underfoot to stimulate the economy, however, include a 'credit easing' scheme, which will release up to £40 billion in loans to small businesses, and a major 'National Infrastructure Plan', which is expected to see £30 billion invested across 40 projects.

One of the 'credit easing' plans is for the government to underwrite loans made by banks made to small businesses to cut the interest rates payable by those firms. Another is encouraging firms to sell bonds on the open market.

The infrastructure plans, meanwhile, which are set to be funded by pension funds and Chinese investment, include major road and rail projects across the country, with the North West strongly favoured. There are plans to write down the debt on the Humber Bridge near Hull to allow for a large reduction in the toll, and for a potential extension in the London Underground network to Battersea.

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Keith McDonald
Which4U Editor