Macroeconomics: UK economy, IB Economics

This Observer piece nails its colours to the mast: the introduction of customs checks three plus years after Brexit is going to be associated with a number of costs, increasing prices and inflation.

And, I would note, that this isn't yet full border checks - it's "inspections of some goods". So, for all the Leavers out there: where are the corresponding benefits? 

More costs of Brexit, less choice, and fewer small businesses. It's what we voted for apparently. 

It's worth noting that the environment for small business appears to be markedly worse this year than it was two years ago, with a 52% rise in insolvencies since 2021, attributed to COVID and Brexit. 

However, as an inquisitive economist, I would always ask whether we can be certain that these are the causes? There is a school of thought that suggests that post-2008 and the global financial crisis and definitely post-COVID we've seen government prop up so-called zombie businesses and 2023 might simply be a year where more of them have been 'allowed' to fail.

The Guardian has highlighted a Federation of Small Businesses survey that suggests that small business confidence is still being adversely affected by the cost of living crisis, and continued uncertainty means that it's yet to return on any scale, and this has obvious implications for economic growth. 

I'll just leave this here - the Director-General of the British Chambers of Commerce (BCC) has issued a stark forecast about what is coming down the tracks as regards economic growth and the future for many small businesses. 

An old favourite, tax avoidance, from a familiar source: Amazon. 

It seems that the introduction of a digital services tax in the UK is going to fall on third-party sellers who use Amazon as a platform for their sales, but not the company itself. 

This is because the tax isn't being levied on sales but on the provision of services - and Amazon are providing these small traders with a service. To put that into context, Amazon, which only paid £14.4 million on total UK revenues of £13.7bn last year, seems to be able to avoid tax once again.

Legal, no doubt. Ethical? Perhaps Amazon might consider paying the tax on behalf of small traders. Ho, ho.

A lovely example of opportunity cost - empty shops on the High Street cost taxpayers around £1bn a year - and many small business also argue that they are a major concern. 

This is prompting the seemingly annual call for a review of business rates - again.

Some very good examples of the impact of the new customs charges on small Scottish businesses, increasing costs for firms in a way that some are going to find untenable, and, as a result, may go out of business. Well done, Leave voters: I can only assume that this is what you voted for. 

This Larry Elliott piece looks at the reality of the Labour Party cracking down on tax avoidance: it's not as straightforward as it might seem, and that the reality is that most of the so-called tax gap is due to small businesses underpaying taxation. 

This Bloomberg clip looks at the impact of higher energy costs on British businesses, and suggests that we are on the brink of seeing a surge of bankruptcies among small and medium-sized businesses, which will only be exacerbated by the ending of the government's energy support scheme in the very near future. 

The government have announced that they are scaling back their support for businesses after March, with the promise of £5.5bn transitional help for firms for 12 months from 1 April.

However, businesses themselves aren't very pleased - particularly small businesses who think that such a level of support is not enough and puts them at a disadvantage, and other energy uses, notably the steel sector, have pointed out that the level of support in the UK is lower than that in other economies, such as Germany.  

A worrying revelation from the Federation for Small Businesses (FSB), with the news that a record number of them could be on the point of closing. 

This would be bad for the UK economy, and might get you thinking about those reasons why small businesses are so important - as engines of growth, as innovators, and as a testing ground for entrepreneurs, among other things. I wonder how many more factors you can come up with?

Small businesses should be in receipt of small 'bounce back' loans in the near future: it is offering loans of between £2,000 and £50,000 at an interest rate of 2.5%.

I'm glad that the government has simplified the process of application - however, I can't help thinking that the size of the loan is relatively small, and more about rhetoric than reality.