The case for and against different businesses and industries receiving government financial support during a recession...

To help with finance, BIS (UK department for Business, Innovation and Skills) has put together a support package to address the cash flow, credit and capital needs of small and medium sized businesses. The package consists of 3 initiatives; enterprise finance guarantee, capital for enterprise fund and working capital scheme. These initiatives were launched in 2009.

Specific support has also been offered to the motor industry. The automotive assistance programme is a £2.3 billion package of loans and loan guarantees from both the government (£1 billion) and the European investment bank (£1.3 billion) . The programme is set up to provide access to finance for viable business with turnovers in excess of £25 million in the UK's automotive sectors to encourage investment in new green technology.

A scrap-age scheme was also put forward in the budget, offering customers buying new vehicles a £2000 discount when trading in vehicles over 10 years old of which they have owned for at least 12 months. The cars are then scrapped when traded in, reducing the amount of old cars on the road, which helps the environment as less pollution is let out into the atmosphere, in a bid to become more greener as a planet.

Furthermore, financial support to the banking industry has been introduced. After consultation with the bank of England and the financial services authority, the government announces that it is bringing forward measures to ensure the stability of the financial system and to protect savers, depositors, businesses and borrowers.

The proposals announced intend to;

- Provide sufficient liquidity in the short term

- Make available new capital to UK banks and building societies to strengthen their resources permitting them to restructure their finances, while maintaining their support for the economy

- Ensure that the banking system has the funds necessary to maintain lending in the medium term

In these difficult market conditions, the bank of England will take all action to ensure the banking system has access to sufficient liquidity.

Also, the government is establishing a facility which will make tier 1 capital to eligible institutions (UK incorporated banks which have substantial business in the UK and building societies). In reviewing these applicants, the government will give regard to an institutions role in the UK banking system and the overall economy.

The following major UK banks and building society have confirmed their participant in a government support recapitalisation scheme;

- Lloyd's TSB

- Barclay's

- HBOS

- Abbey

- Nationwide building society

I believe the BIS schemes are a great way to help small businesses that are struggling get that extra boost they need to secure the finance they need which can be later used to improve businesses and social enterprises in disadvantaged areas, helping support community development finance institutions which can potentially help change someones life for the better. The schemes also allow businesses to pay off any existing debt and help them to raise finance.

I also believe that the government car scrap-age scheme is an excellent idea as it makes people want to trade in their old cars for discounted new ones. This process helps the planet a lot as the less old cars on the road means less toxic pollution being let go into the atmosphere which therefore helps the planet to become greener and more healthy. The scheme will also reduce the amount of emergency pick-up calls, as less old cars will be on the road meaning that less people are going to break down as more newer, greener cars are on the road.

How the recession can create opportunities and threats for business and industries...

A recession is the general slowdown of economic activity over a period of time.

There are many characteristics of a recession, these include;

- Increased government borrowing

- A fall in business confidence and profits

- Falling demands for imports

- De-stocking and heavy price discounting which leads to lower inflation

- Reduced inflationary pressure in the market leads to a rise in employment

- Declining demand for output which leads to high levels of spare productive capacity







One company that has benefited from the recent recession is Primark. Figures show that Primark has had an increase of 20% in sales for the year 2009. Profits are up 8% to £252m. Primark also prepare to open their 192nd store in Cambridge.

The economic downturn means many shoppers turn to inferior products as oppose to the luxury brands that they would have purchased before the recession as people worry about household budgets.

Some people benefit from a recession. Companies who deal with bankruptcies and debt problems benefit from a recession as more and more people become financially challenged and seek financial help, therefore people such as bailiffs and financial advisers are needed more often.








Although there are potential benefits, some business' and industries can be threatened by a recession and in some cases even become bankrupt and go into administration. A recent example of this is Woolworth's. Woolworth's had been present on the UK high street for 100 years until early 2009 when over 800 stores were closed as the company went into administration. Woolworth's went into administration with debts of £385m. The chain is the most high profile UK high street store that has suffered from the recession so far.

Woolworth's was most widely known for its "pic N' mix", sadly this was not enough to keep the company afloat during the recent recession. The company were forced to sell all their remaining stock at discounted prices in a bid to make some of the money back that they had borrowed. As this case shows, not all business' benefit from a recession and there can be fatal results which lead companies to vanish from the high street.

Although Woolworth's were hit hard by the recession, they have recently have opened an online shop, where they are doing financially well.