Interesting to watch Peter Mandelson's announcement this morning of the package of support which has been put together by BERR to support Britain's small business through the current economic crisis.
For those of you who didn't see it, main features are £20billion worth of guarantees matching bank lending 50:50 (so if a bank lends £100k, £50k is guaranteed by the government) plus a £75 million enterprise fund providing seed & working capital for small business.
Small print is that the £20billion support is only going to 'ordinary risk' businesses - and interesting also that the government is only making a provision for £225million in defaults - which is around 1%. Methinks it will prove a lot more expensive to the taxpayer than that.
While it's great that support is being provided for UK business all this feels a bit like King Canute trying to stop the tide coming in. It feels like the government is desperately trying to preserve the business status quo rather than addressing the REAL issue of where is our future wealth going to come from?
As I've said elsewhere on this blog, I would really like BERR to identify key growth sectors - or sectors it would be foolish/dangerous to lose - and target all this financial support at those. For example, renewable energy, manufacturing, engineering, farming and bioscience. That would encourage ailing businesses to divert their energy and resources to exploring new, higher growth areas as well as build a really strong economy to secure the future (which in turn will provide the money to pay for all these current bailouts!)
Like it or not, the world economy is changing dramatically, and much as governments may try I don't think we will ever go back to the mass consumerism era of the past couple of decades.
It's just not sustainable.