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Spending review 'will cause pain but create opportunities'

General News |  18/10/2010
Spending review 'will cause pain but create opportunities' ...While this week's Comprehensive Spending Review will create difficulties for UK businesses, it will also bring new trading opportunities, one expert has suggested.

Phil McCabe, media and public relations manager for the Forum of Private Business, explained that many public sector contracts will be reduced or lost altogether by private firms, as government spending cuts bite.

He suggested that in the worst cases, where companies are largely reliant upon public contracts, this could even push some towards insolvency.

"However, there is another side to the coin," he stated. "Opportunities are likely to be found in service areas vacated by public sector bodies and, on a local level, small firms are best placed to deliver quality and value for money."

One of the ways the government can improve conditions for small enterprises is by reducing tax administration and other red tape "in the name of efficiency", Mr McCabe said.

Achieving this goal could help stimulate business growth and lead to further job creation in the UK, he added.

"Often the relationship between the public sector and private businesses is overlooked. Any government efficiency review must address two key areas of this relationship - tendering for and winning public contracts which must be streamlined and made more accessible to smaller businesses, and the payment of suppliers," Mr McCabe stated.

"Furthermore, if the government is serious about the private sector and small business growth being a catalyst for strong economic recovery, it must be prepared to put in place much bolder policies taking them out of taxation wherever possible."

Speaking yesterday, chancellor George Osborne told the BBC that the government's spending cuts "will restore credibility to the public finances".

He claimed that the government "has to see this through", as Britain was on the verge of bankruptcy after the general election.

"If we're going to have growth and jobs in the future, we've got to move this country into a place where people can invest with confidence," Mr Osborne said.

Posted by Stephen Wilkinson


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