Business loan support must be backed by consumer confidence boost

‘The Government’s guarantee for bank lending to small and medium sized businesses should enable businesses to survive the downturn, but more must be done to revive consumer confidence,’ according to Sue Robinson, Director of the Retail Motor Industry Federation (RMIF), representing 8,000 retail motor sector businesses, who was commenting on the package of measures announced today (Wednesday 14 January 2009).

The Government has announced that it will commit to guaranteeing £21 billion of bank lending for small and medium sized enterprises (SMEs) until 2011. This will include guarantees for lending, as well as equity capital.

According to Robinson, consumer confidence must be revived at the same time: ‘Consumers want assurance from the Government that jobs are secure, that disposable income will not decline further, that general economic conditions will start to improve, and that credit will become more generally available. Once this happens consumers will return to normal buying patterns, and it is this that will secure the future for business in the long term.’

For business support, Robinson believes that there are a wide-range of options open to Government, especially for businesses in the retail motor sector: ‘Many retail motor sector businesses could be helped by the abolition of the new rules on Vehicle Excise Duty (VED) refunds, as well as higher and more realistic Business Rate Relief on empty business premises. The introduction of a Scrappage Scheme that would encourage owners to dispose of older and more polluting vehicles, in favour of newer vehicles would help stimulate the new car market.’

Robinson adds: ‘We are in regular contact with Government on these issues and more, and will continue to advocate these measures, as they benefit business.’