20 per cent VAT 2012 budget 50% return accountancy accountancy fees accountancy services accountant accountant B accountants accounting for dividends accounting records accounting software accounts accounts software administration annuity annuity rates Autumn statement avoid inheritance tax avoidance of tax avoiding inheritance tax bank lending basic personal allowance BCC big picture book keeping Bribery Act British Chamber of Commerce BS7858 budget budget 2011 Budget 2012 budgeting business business accounts online business advice business cash management business confidence business continuity business continuity management business continuity plans business cost management business efficiency business exit business exit planning business finance business friendly business funding business goals business growth business investment business loan business management business owners business performance business plan business planning business record keeping business records business sale business success business succession planning business survival business tax planning business tips bwe based account cash flow Cash flow forecast cash is king cash management Cash-based accounting cashflow chancellor chartered accountant chartered accountant Birmingham chartered accountants chartered financial planner chartered financial planner Birmin child savings children’s savings choosing an accountant client entertaining Cloud accounting Company Tax returns compliance industry contractors IR35 corporartion tax Corporation tax credit control credit control procedure cyber attack cyber crime cyber insurance cyber security cyber threats data security data security. IT security debt collection debt recovery despite some of the bad press over recent years director’s loan account directors loan directors pensions Directors’ loan account dividends doubl Dragon’s Den dragons den Economic expansion EIS email security employee data security Enterprise Investment Scheme enterprise zones entrepreneur Entrepreneur’s relief entrepreneurs entrepreneurs relief ethical hacker Everyone needs to finance their retirement and exit planning finance finance management financial advisor financial difficulty financial forecasts financial freedom financial goals Financial management financial plan financial planner financial planning financial planning checklist financial planning tips financial wellbeing FSTE 100 FTSE100 fund manager gifts global markets growth growth finance HMRC HMRC enquiries HMRC enquiry HMRC IR35 guidance HMRC tax enquiries HMRC tax enquiry home loans how to manage time ICAEW IHT income tax income tax r income tax relief income tax return independent financial advisor information security information security management inheritance tax inheritance tax planning insolvency Institute of Chartered Accountants investing Investment investment advice investment diversity investment in marketing investment management investment options investment philosophy investment planning investment portfolio investment risk investment strategies investment volatility investments investors IR35 ISO 27001 ISO 27001 benchmark ISO 27001 consultants ISO22301 ISO27001 IT security Jimmy Carr jobs keeping the books key perfirmance indicators key performance indicators KPIs kpi's late payment penalties late payment penalty fines late payments legal tax strategy management information management meetings management standards managing data security marketing investment miscalculated tax motivating staff national lottery new years resolution online accountancy online accountancy software online accounting on-line accounting online accounting software online accounts online tax return online VAT return outsourced accountancy outsourcing outsourcing accounts overtrading owner managers Parker Management Consultants partnership agreements passwords Pay off mortgage PAYE paying a dividend Payroll penetration testing pension pension contribution pension contributions pension fund Pension funds pension investment pension investment strategy pension scheme pensions pensions forecast per personal allowance trap Personal financial plan personal financial planning personal guarantees personal pension personal pensions personal tax return plumbers tax safe plan pre pack administration private pension profitable business sale R & D tax credits R&D tax credits recession red tape reduce tax remote working report on economy research and development tax credits retirement retirement planning risk risk return safest passwords Saga sareholder protection cover security of websites Seed Enterprise Investment Scheme SEIS selecting an accountant Self assessment self assessment tax return self invested personal pension selling my business selling your company shareholder agreements shareholder protection SIPP SIPPS small business small business owners small business tax small businesses small firms SME SME business management SME marketing SME tax planning SMEs social media policy SSAS start up start-up stock market succession planning tax accountant tax affairs tax avoidance tax breaks tax charges tax code tax disclosure tax enquiries tax enquiry tax evasion tax investigation tax investigations tax liability tax man tax mitigation strategies Tax planning tax planning advice tax planning schemes tax reduction tax reform tax relief Tax return tax saving tax saving strategies tax savings tax strategies Tax tribunals taxation tax-break time management time management skills top rate of tax tough times UK Bribery Act UK economy VAT increase vat return VAT rise VAT submission web based acc website security when to pay a dividend work-life balance Xero Xero accountancy software Xero accountants xero accounting xero accounts Xero accounts service

Mayan calendars and the media – 2012 isn’t necessarily the end of the world

Add to: Digg Add to: Del.icio.us Add to: Facebook Add to: Furl Add to: Google Add to: Live Spaces Add to: MySpace Add to: StumbleUpon Add to: Twitter
Thursday February 23, 2012 at 9:00am

The problem with the future is it hasn’t happened yet.

For business this means planning ahead is dependent on speculation. Of course, that speculation is based upon facts and figures, but how do you interpret them? In reality, we often depend upon other people’s interpretations and predictions, but only this week we’ve found cause to be wary of putting too much faith in the media.

The Institute of Chartered Accountants in England and Wales (ICAEW) recently released a report on the economy which makes for gloomy reading. In its assessment of companies’ responses to tough trading conditions, the ICAEW revealed some depressing statistics: 

  • The business confidence is negative at -9.3. This suggests a contraction in the UK economy of 0.2% in the first quarter of 2012 – the same as the final quarter of 2011. 
  • Businesses expect capital investment to grow by only 0.9% over the next year. Clearly there is a reluctance to invest in growth when the outlook is so poor. 
  • Salaries are set to rise by a very modest 1.6% on average this year. 
  • A fifth of businesses reported stock levels as being above average, suggesting a lack of consumer demand. 
  • More than half the businesses surveyed were operating at 20% below capacity.   

These are sobering findings and any business would do well to take them into account when planning for the future. The Government’s own plans for economic recovery were rooted in the prediction that the private sector would expand to deal with cutbacks in the public sector. This has not happened and in turn the Exchequer will not be receiving the boosted tax income which would have accompanied this growth.

As a consequence, many commentators have called on the Government to ease back on some of its restraints and introduce measures to boost business.

However, dark skies can also have chinks of light and it is important to consider the positives.

Bad News is Good News (for the Media)

Gloom sells. The media loves to leap on downbeat statistics and lay them on as thickly as possible. The danger for business is it gives the impression that the best option is to step out onto your high window ledge and take a deep breath.

Even the BBC article on the matter has been framed in a manner which makes things seem worse than they are. Business confidence:
“…shows a negative outlook, at -9.3 in the third quarter as against +8.1 a year earlier.”

True enough, but this fails to note business confidence was -9.7 in the final quarter of 2011. So whilst businesses are obviously still feeling negative, the situation is actually better than it was at the close of last year.

The BBC article suggests these figures indicate a move towards a double-dip recession, but other commentators take that mild improvement as a sign we might just avoid it.

What’s more, the survey also notes that whilst large companies are really feeling the pinch, SMEs are facing a better outlook. Over the next 12 months, these businesses are expected to take on more new workers than big companies, providing some cautious optimism, though this fact is buried away in the closing line of the BBC’s piece, as if it is barely worth mentioning.

Gloom but not Doom

It’s not pretty reading by any stretch of the imagination, but the ICAEW report does allow for a couple of breaks in the cloud. The smart business will take what heart it can from this and plan realistically.

Keep the backdrop of doom so beloved of the media in perspective and look at the facts which count – those relating to your own company and sector. Watch your key performance indicators and act accordingly. Make sure you also seek sound professional advice so you can make genuinely informed decisions about the future.

While the Coalition’s slogan, “We’re all in this together” has received plenty of ridicule, for businesses it is a point worth taking on board. Toughing it out alone is not a good idea; there is help out there if you choose to take it.

The Mayan calendar famously ends in 2012 and the media seem determined to make this their theme of the year. We are facing tough times, but it’s not the end of the world as we know it. With sensible, realistic planning SMEs can reach next year in good shape and maybe even with modest growth.


Andy Parker
Chartered Accountant and Chartered Financial Planner

Comments on this post:

There aren't any comments for this post yet. Why not be the first to comment?

Share your experiences:

Your Name  
(to appear with your comment)
Email Address  
(will not be published)
Comments:  
Human Validation Check  
In the box below, please type the characters that you see in the picture. This helps us to ensure a real person (and not a crafty computer!) is submitting this form.

Enter the code shown to the left:

Parker Chartered Accountants and Financial Advisors is the trading name for Parker Business Development Ltd (Registered No. 4116664), Parker Tax and Trust Ltd (Registered No. 06950353) and Parker Financial Planning LLP (Registered No. OC347027). Parker Financial Planning LLP is authorised and regulated by the Financial Conduct Authority. All companies are registered in England and Wales – registered office contact details here