For P4, learners need to recognise the role of government in establishing the business climate through the use of incentives to business such as cutting the business rates of tax or through regional development policies. Regional and local government also have business generation at the heart of what they do in promoting local economic wellbeing and there are plentiful illustrations of how they create business micro environments.
Key words :
Role of government:
In the UK voters elect a national government at Westminster and local government in town halls. Voters expect the government to manage the economy well. Government economic objectives include:
The government can change the way businesses work and influence the economy either by passing laws, or by changing its own spending or taxes. For example:
The main types of tax include:
EU fines Microsoft record $1.4bn
The European Commission has fined US computer giant Microsoft for defying sanctions imposed on it for anti-competitive behaviour.
Microsoft must now pay a record 899m euros ($1.4bn; £680.9m) after it failed to comply with a 2004 ruling that it abused its dominant market position. The ruling said that Microsoft was guilty of not providing key code to rival software makers. EU regulators said the firm was the first to break an EU anti-trust ruling.
The fines come on top of earlier fines of 280m euros imposed in July 2006, and of 497m euros in March 2004. "Microsoft was the first company in 50 years of EU competition policy that the Commission has had to fine for failure to comply with an antitrust decision," Competition Commissioner Neelie Kroes said in a statement.
EU pushes its own 'Small Business Act'
The European Commission in Brussels unveils on Wednesday a raft of policy ideas to support small and medium-size businesses (under 250 employees).
The draft "Small Business Act", as it is known, would create a unique legal status for small businesses in Europe, such that companies created in one member-state could operate throughout the EU without hindrance. Under the Act, it would take only one week and cost just €1 to create a company.
Significantly, Brussels also recommends a law to insure that small businesses be paid faster. It is estimated that every year 450,000 jobs are lost because companies are paid too late.
The draft legislation requires approval by Europe's finance ministers. If they okay the proposal, it could come into force by mid-2010.
Double-dip recession leaves British shops vacant: Nearly one in seven British shops remained vacant at the end of June as retailers struggled in a double-dip recession, a report from Local Data Company (LDC) said on Tuesday.
The consultancy reported that there had been no improvement in the second quarter from March's UK shop vacancy rate of 14.6 percent, the highest level since June 2008, and that it did not expect the situation to ease any time soon. Vacancies increased in all regions apart from London over the past 12 months. The rate in the capital fell from 10.7 percent to 10.1 percent.
Retailers have closed poorly performing outlets, while some have gone out of business, hit by the combination of constrained consumer spending, muted wage growth and government austerity measures.
Video games retailer Game went into administration in March, and last week struggling sports goods retailer JJB Sports warned investors that their shares may be worthless.
“Normal service is unlikely to be resumed any time soon as far as retailers are concerned,” LDC said. “For the high street, and especially for secondary shopping centers, it is clear that the current high levels of vacancy are likely to remain.”
Rate 2010 2011 2012
Small Profits Rate* 21%* 20%* 20%*
Small Profits Rate can be claimed by qualifying companies with profits at a rate not exceeding £300,000
Main rate of Corporation Tax* 28%* 26%* 24%*
Essex County Council sets up bank to help businesses in recession
Essex County Council has set aside £50 million to enable small and medium size businesses to access loans of up to £100,000. It is operating the bank in partnership with Santander, the Spanish-based banking giant that owns Abbey and Alliance & Leicester.
Many firms across Britain face going out of business because commercial banks have withdrawn lending facilities in the wake of the credit crunch. This has left lots of perfectly viable businesses unable to pay essential day-to-day bills, such as rent, salaries and supplies.
Councillor Stephen Castle, from Essex County Council, said the 'Banking on Essex' scheme was intended to counteract this problem. He said: "The current economic downturn has impacted across many sectors, with small businesses being especially hard hit. "Essex has a larger proportion of small businesses than most counties, and has a well-earned a reputation for its entrepreneurial spirit.
"It is essential that the public and private sectors work together in these trying economic times to keep people employed and retain the skills Essex has in key industries."
Write a leaflet for people thinking of opening up a business that explains the role of government in establishing the business climate through European, National and Local policy measures.