Category: Business

The year before the recession of 2007 saw the birth of as many as 558000 companies. But only about 414000 companies were formed in 2015 as per the Census Bureau, which was a little over the year before. Though the rate of unemployment is on the decline and the stock markets are up, the economy is still not expanding and so is the productivity and the wage rise. The economists believe it is due to the slump in start-ups which essentially means there is less creation of new businesses.

It is critical to understand the reason behind the slump, and it could be due to the power of the big corporations. The economists argue that these big corporations can kick out the challengers or acquire them before they can be a force to reckon. So if you are wondering why bother about the stifling entrepreneurship, experts say that this kind of slump has a lot of implications. The small companies and start-ups are the ones that offer dynamism to the economy. These companies can generate, create job, innovations and is a ladder for success to middle class and immigrants. The most significant contribution of startups is that it makes the economy more productive. They have the talent to invent new approaches, innovations, and products that challenge the big companies to compete or be ignored by the customers. Startups have created jobs and also promote entrepreneurship.

Though the slump is observed for more than 30 years, the recent trends are what have worried economists. In the 90’s the slowdown was only in specific sectors like the retail, and that was not a drag on the economy or productivity. But since 2000, the deceleration is noticed in the technology sector, and this is coupled with low productivity. Research conducted suggests that the entrepreneurship decline and reduction in business dynamism is a primary reason for stagnation in productivity.

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Britain voted to ditch the EU, and their currency fell by 13% of its value against the euro. That means the cost of Europe vacations for Britons will be higher than usual, so will be the foods like meat, cheese, wine, etc. which is exported from other parts of Europe. Not to mention gas which has become expensive.

The Britons have not taken the inflation lightly and have started to show more support to the Labour party in the parliamentary elections. The economy currently due to Brexit is weak, the prices are high, but the wages have not gone up. Mr. Stampton, who is a resident of London voted for a party which advocated for Brexit but is a traditional voter for Conservatives. The pound value has made him resort to check out the parks of South London instead of sun-kissed beaches in Greece for a yearly summer vacation.

The economy has not grown a great deal compared to the previous quarter last year. It has only seen a 2% growth in this quarter. Majority of the economic activity in Britain is made up of consumer spending, so when the ordinary people are in trouble, they spend less and hence becomes decisive for the economy. The average worker has to wade through the high prices of daily consumer goods coupled with no increase in wages. Some economists are expecting the country to fall into a recession as they expect the economy to grow by 1.5 to 1,7 percent annually over the next couple of years.

Research reveals that the credit card balances are 10% higher than compared to the same time last year. That according to the Bank Of England is the fastest growth in a decade, and this is a cause for concern. Consumers will soon exhaust all sources of money as the paychecks are deflated due to inflation. Borrowing is growing faster than real incomes, and that means the consumers will not be able to keep the economy going with the wages, not in pace with inflation.

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