The eyes of the world will be on the UK this year and PAYE umbrella company contractors have a role to play in promoting the contribution small businesses make to the country’s economy.

2012 sees the Queen’s Diamond Jubilee, the Olympics and the Paralympic Games. All of these events are likely to draw visitors to the UK from every corner of the globe and provide a welcome boost to the UK economy.

The Forum of Private Business has now launched the Get Britain Trading campaign, which aims to encourage the Government to help small businesses trade on a local and global basis.

The FPB’s Get Britain Trading manifesto focuses on four keys areas, simple and proportionate tax, improving cash flow, creating opportunities for growth and creating jobs and improving skills.

David Cameron frequently says that small businesses will drive the private sector recovery, but they need the right trading conditions if they are to expand and create much needed jobs. One of the best ways to achieve this, according to the FPB, it to reduce the amount of bureaucracy small firms have to deal with. More than 50% of SMEs believe their business would develop if they had less red tape to contend with.

Simplifying employment law would encourage small businesses to take on additional staff and help absorb public sector redundancies. But the UK also needs to plug the ever widening skills gap and the Get Britain Trading campaign is calling for a review of the education system so that young people are work ready when they leave school or university.

Contractors can pledge their support for the campaign by signing up on the Get Britain Trading website.

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Umbrella company contractors might be interested to learn that despite the continuing economic turmoil at home and abroad this year, experts predict that more than 470,000 new businesses will have been created before the end of 2011.

According to research by Creditsafe, the business intelligence provider, the number of start-ups this year will be 17% up on last year’s figure of 400,570.

Business insolvencies increased marginally in October, with 0.1% of companies declaring themselves insolvent, compared to 0.09% in September. In October 2010, the figure was 0.08%. However, Creditsafe points out that the net number of businesses in the UK is increasing.

Once insolvencies have been taken into account, there were 386,000 new registered limited companies in the UK in the first three quarters of 2011.

London remains the start-up capital with 160,000 new firms launched this year. Birmingham, Brighton, Bristol and Manchester are also popular cities for those looking to start up a new venture.

Creditsafe’s business development director, David Knowles, said 2011 has been a difficult year but the British public are still displaying a strong entrepreneurial spirit. While insolvencies having been rising this year, the number of new start-ups has also been growing over the last two years.

David Cameron continually tells us that small businesses are the driving force to pull the UK out of the economic doldrums. Back in March, he backed the StartUp Britain campaign – designed by entrepreneurs for entrepreneurs. Since then the PM has also launched the GREAT Britain campaign to encourage foreign investors to do business in the UK.

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Interim managers are back in demand according to the latest quarterly survey from the IMA.

Ipsos MORI conducted the survey covering the period from July to September. The results showed that despite the turbulent economic conditions, 22% more new assignments were recorded compared to the previous quarter.

Completed private sector interim managerial assignments rose to their highest level since the fourth quarter of 2007. 65% of assignments were completed for private sector organisations in Q3; a rise of four percentage points on the second quarter.

The IMA also saw an increase in the number of enquiries from member firms requiring interim managers. The Association said enquiries have risen steadily this year and are now 68% higher than they were in the fourth quarter of last year.

IMA chair, Jason Atkinson, said the summer season generally sees a slow-down in hiring, and coupled with the struggling economy, its quite amazing to see a 22% increase in the number of assignments. This shows that companies continue to value interim managers as a flexible and highly effective resource that can be utilised come rain or shine.

He went on to say that it was encouraging to see more completed assignments in the private sector and usage in that sector had now returned to 2007 levels.

The IMA celebrates its 25^th anniversary next year and since its inception the interim management sector has grown into a mainstream resourcing option contributing £1.5 billion to the British economy. This trend is expected to continue as businesses recognise interim managers as an efficient resource that can be put in place quickly, he added.

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What measures would umbrella company contractors like to see laid out in the Chancellor’s Autumn Statement?

The business community has compiled its “wishlist” ahead of George Osborne’s speech on November 29^th. Not surprisingly, credit easing features on this list, along with less bureaucracy, super-fast broadband and tax changes for R&D.

The Chancellor’s Autumn Statement outlines measures designed to stimulate our fragile economy and will come at the same time as the Office of Budget Responsibility releases its new economic forecasts.

Small businesses in particular will be hoping to see a bold, affordable and readily available initiative to enable them to access much needed credit. As the FSB points out, the smallest businesses get the worst deal when it comes to lending; they pay the highest rate of interest and are most at risk of refusal.

John Walker, the chairman of the FSB, explained that micro-businesses must be able to benefit from credit easing. However, because the high street banks already dominate the SME market, many firms are put off applying for finance simply because they expect to be refused.

The EEF agrees that measures must be taken to help companies obtain credit.  It points out that in order for the economy to grow, firms must be able to access the finance and skills necessary to help individual businesses expand.

The Forum of Private Business would like to see the Chancellor reduce the burden of employment law. The Forum claims its legal helpline has been bogged down with calls since new employment regulations came into force at the beginning of October.

A lot of businesses believe the best thing the Chancellor could do is reward companies that create job opportunities with a lower rate of tax. Entrepreneurs are the lifeblood of the UK economy, said Andy Raynor of RSM Tenon, and yet they are paying the highest level of taxes in 30 years.

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The Bank of England says that the quantitative easing programme that was rolled out after the credit crunch boosted the UK’s economy by 2%, adding weight to demands for the Bank to print more money.

During the QE programme between March 2009 and January the following year, the BoE bought assets valued at £200 billion, to help bolster the economy. This helped to increase GDP by between 1.5% and 2%.

Fears that the UK could slip back into recession have increased calls for a further programme of QE.

Interest rates cannot be lowered any further, so speculation is rising that the Bank will once again print more money. The downside of doing this is that inflation could rise, heaping more misery on already cash-strapped families.

The Bank says the first round of QE measures boosted growth, but points out that there may be different effects next time.

Adam Posen, a member of the BoE Monetary Policy Committee, has been voting for more QE, saying it is needed if we are going to avoid long-lasting damage to the economy.

Meanwhile, the FSB says the government is out of touch with reality when it comes to growing the economy.

The Federation says that very few of the coalition’s policies tackle the problems facing small firms. Reducing red tape and providing initiatives to encourage small businesses to take on staff are welcome, but the government still needs to do more.

Small businesses are facing some of the same challenges that they faced during the credit crisis. Uncertainty surrounding contracts, poor cash flow, the inability to access finance and the cost of credit are preventing them from hiring.

The FSB is calling on the government to extend both the work trials scheme and the NIC holiday for micro-businesses. It also suggests reducing VAT in the construction and tourism sectors to 5% on a temporary basis.

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Despite the slow growth in the UK economy, contractors such as those working through umbrella companies are doing surprisingly well, according to a new survey by the PCG.

The PCG polled 2,000 freelancers and discovered that in the last twelve months, 75% of them have been under contract for at least eleven of them. 84% of the survey’s respondents said they expected business opportunities to remain the same or improve in the coming months.

The MD of the PCG, John Brazier, said he was in no way surprised at the results because freelancers can help accelerate the economy while UK PlC is getting back on its feet.

He went on to say that although public sector opportunities are drying up, PCG members have proved that they are adaptable and secured private sector contracts. However, in order for the freelance community to deliver its full potential, the government must address the problem of red tape and reduce the amount of regulations.

Whilst life is good for the majority of freelancers and contractors, nearly 25% of SMEs saw their pre-tax profits drop by 50% in the last financial year.

The SME Distress Monitor, from Baker Tilly, also shows that nearly 10% of companies that filed accounts last year saw their sales decrease by more than 30%.

Sarah Batchelor, from Baker Tilly, said the research demonstrated that short-term debt pressures are having a really bad effect on SMEs. As cash-flow tightens, business owners must take action at the earliest possible opportunity to make the best of available financial options to stave off problems in the future.

The current economic outlook is far from stable and it is crucial that SMEs seek advice and implement safeguards if they are going to survive, she added.

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The FSB has called on politicians to stop playing politics when it comes to the economic recovery and formulate a realistic plan to help small businesses grow.

Ed Balls, the Shadow Chancellor, has been vocal in his call for the 20p VAT rate to be reversed but the FSB thinks this would not be a sensible move and could actually harm the UK’s fragile economy.

The Federation thinks that rather than reversing the rate, the UK should do as some other EU countries have done and implement a temporary cut in VAT to 5% in the tourism and construction sectors for a period of 12 months.

Such a move would kick start growth, lead to the creation of more jobs and increase the amount of money the Treasury receives. The FSB believes this is a much better option than rushing through infrastructure projects costing £5 billion. The FSB also says Labour must develop more policies to bolster growth than just cutting VAT and that real talks must commence into ways of rebuilding and strengthening the economy.

John Walker, the FSB’s national chairman, said that unless we see a more aggressive, proactive approach to growth the economy is going to decline. The Federation agrees that action must be taken, but reversing the VAT increase is not the answer.

The UK has a very fragile economy at the moment and the political parties shouldn’t be kicking it around like a football at their party conferences. Instead, the parties should stop sparring and work together to deliver tangible growth policies.

Although business owners in the UK have little confidence in the national and world-wide economies, they are still confident about the prospects for their own company over the next six months. Only 25% of business owners think the coalition is doing enough to encourage growth and stimulate the economic recovery.

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New data suggests that the UK’s small business owners are leading the country towards economic recovery.

Figures released recently by the recruitment firm Manpower show that it is the smaller enterprises, including those that need umbrella company contractors, that are creating new job opportunities and not their larger counterparts. Manpower’s latest Employment Outlook shows an increase of 8% in the hiring intentions of small firms over the next three months.

Mark Cahill, the managing director of Manpower UK, said that despite ongoing concerns about the UK economy, the outlook for employment is at its most positive for three years.

Candidates often assume that the bigger the firm the better when it comes to job vacancies, but these figures suggest that small really is beautiful. There is still huge unmet demand for candidates to fill skills shortage roles, such as IT specialists and engineers, he continued.

Another report, this time from ECI Partners, claims that small business owners are confident about the future prospects for their company and anticipate growing in the next year.

74% of respondents to the Growth Survey expect their headcount to rise in the next 12 months and 50% said that growth will exceed 5%. In a further sign of optimism, 60% expect to see a double digit rise in turnover.

Business and enterprise minister, Mark Prisk, commented on the report saying it was good news that so many small enterprises expect to recruit and see their profits increasing. The government is committed to helping private sector businesses create jobs, and to support them we’re reducing taxation on business, tackling onerous bureaucracy and backing start-ups, he added.

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Female umbrella contractors might be interested to learn that Scottish recruiters believe the shortage of women working in the engineering, maths, science and technology sectors could be detrimental to the country’s economy.

Last week the Institution of Engineering and Technology said the proportion of women working in science related jobs is still the same as it was in 2008.

Colin Woodward, the director of Contract Scotland, said the construction industry in Scotland had been struggling to recruit women into technical and professional roles for the past twenty years. Because the sector failed to take advantage of buoyant market conditions before the recession, it is now still recruiting from a narrow pool of talent.

Despite the fact that few women are entering the field of engineering, people who have graduated are finding it hard to get a job.

Research by Birmingham University has discovered that it is not easy for qualified engineers to get a job that fits their qualifications.

The study found that 46% of the class of 2009 found a position relating to their engineering degree within six months of graduating. A further 20% secured a skilled job, but 24% had to take an unskilled position.

A recent poll from eFinancialCareers’ discovered that 75% of UK graduates would work for free if they thought it would improve their career development and help them secure a permanent job.

Out of the recent batch of finance graduates, the survey found that only 16% have received a job offer. More than a third of finance graduates expect to be unemployed for three months after leaving education.

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A study by ICAs shows that finance directors are losing confidence in the UK economy and cannot reach consensus over the best way to solve the problem.

ICAs surveyed more than 170 of its UK members and discovered that only 9% expect economic growth to be slow but consistent in the coming 12 months. This time last year the figure stood at 28%.

56% expect to see negligible growth until the second half of next year and 25% believe that things are going to get worse before starting to improve. FDs at firms with a turnover of less than 10 million are less optimistic than their counterparts in large organisations.

Just over half of the respondents back the government’s policy of eliminating the fiscal deficit during one parliamentary term, but 20% fear the economy is suffering because of the austerity measures. Among the smaller business community, 30% of FDs said the scale and speed of cuts could damage the economy, whilst 46% thought the coalition was coping with the problem in the right way.

Anton Colella, the chief executive of ICAS, said that as well as being concerned about the current economic predicament, financial directors also worry about where the next global crisis is going to start. Despite their concerns, 60% of FDs have had the chance to grow their business since the start of the recession in 2008 and 52% have managed to grow by acquiring other companies.

Meanwhile, the number of jobs available continues to grow, albeit very slowly, according to the latest Report on Jobs from KPMG and the REC.

The number of permanent staff placements in August increased at the same pace as in July and demand for temporary staff remained steady. More people are now looking for a permanent position as candidate supply rose at its fastest rate since the beginning of 2010.

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The OECD has reported that the UK economy grew by a mere 0.7% in the last year, making it the second worst performing economy in the G7 nations. Only Japan’s economy performed worse than ours and it had the earthquake and tsunami to contend with.

Germany performed best with economic growth of 2.7%, followed by the US and France with 1.6% each.

The OECD also reports that economic growth across the 34 member states has been slowing for four consecutive quarters.

It will therefore come as no great surprise to learn that business confidence in the UK is declining rapidly. The latest UK Business Confidence Monitor from ICAEW and Grant Thornton does not paint a good picture with growing pessimism caused by UK and global economic chaos.

UK businesses also have little faith in the government’s pledge to reduce the regulatory burdens and bureaucracy that have been dogging them in recent years.

The BCM Confidence Index dropped from +13.7 to +8.1 in the third quarter of 2011 and now stands at its lowest since the third quarter of 2009 when we were still in the throes of the economic downturn. Many firms are seeing their turnover and profits going down and have had to revise their future expectations.

Red tape and tax are seen as major challenges for an increasing number of companies. 40% said that regulation is now a bigger burden than it was this time last year whilst 25% said the burden of tax was having a greater impact than it did 12 months ago.

Michael Izza, the chief executive of ICAEW, said businesses are trying their hardest to boost economic growth but feel the government has done little to tackle red tape and improve tax competitiveness. The government needs to implement its Plan for Growth and simplify the UK tax system so Britain becomes more business-friendly.

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The latest Business Trends report from BDO shows that business confidence is plummeting as growth in the manufacturing sector seems to have stagnated.

Businesses in the UK are now expecting to see very little economic growth in the coming six months.

The manufacturing output index, used to gauge advanced growth in the sector, has dropped to 93.9. This is below the benchmark level of 95 and therefore indicates the industry is contracting. It’s also the lowest recording since the economy started to emerge from the recession in October 2009.

The manufacturing optimism index has been below 95 for the last two months, suggesting the manufacturing sector will remain in a recessionary state into the beginning of next year.

The service sector is not faring much better. Although its index has not dropped below the 95 mark, it has been hovering just above for more than a year, indicating zero growth for the remainder of 2011.

Peter Hemington, one of the partners at BDO LLP, said the economic recovery is still faltering and declines in the manufacturing sector are alarming. Furthermore, the service sector is not showing any sign of being able to pick up the slack.

Although the overall picture seems to be one of doom and gloom, businesses in Scotland seem to be doing reasonably OK if the most recent Bank of Scotland Report on Jobs is anything to go by. Demand for both permanent and temporary workers north of the border increased strongly in July.

Bank of Scotland chief economist, Donald MacRae, said the number of permanent placements had been increasing continually over the past ten months, and last month the rate of vacancy growth rose to a three-month high.

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