It is one of the biggest paradoxes of the current state of the economy that while the Government bang on the table and tell businesses and consumers it is time to be brave that they continue to dither and do nothing. Due to the financial troubles the world has faced over the past few years, the perception of financial risk has evolved greatly, so what would have been a worthwhile gamble five years ago is something that might not even be considered now.
Companies, and to a lesser degree consumers, are unwilling to take financial risks that could give them great rewards, lest they go wrong and damage their financial models beyond repair.
It is not just in a financial sense that the Government is potentially damaging the retail industry, but also where they are putting their focus.
High Street Helpers
Much has been made over recent years, and particularly by the retail industry, of the “death of the High Street.” To help deal with this problem and rejuvenate the failing, dull towns and cities up and down the country, the Government hired retail guru Mary Portas as a consultant, to report on what needed to happen to breathe life back into British retail.
As a result of this consultation, the Government has committed funds to redeveloping several High Street locations around the country. The so-called “High Street Innovation Fund” has seen 12 town centres given money to aid redevelopment. Many of these areas have come in for criticism due to the fact they are seemingly not in that much need of help, or are seen to be beyond saving.
Certainly, a more sensible alternative than redeveloping some of the worst hit areas would surely be to invest the money in prominent areas that are at risk of subsiding into a worse condition. Under the current plans, it would appear that the Government want to maintain many high streets at an average level. The alternative would be to look at other options for those not performing, such as perhaps considering converting them into residential properties, while placing a greater focus on maintaining those that are desirable and high performing.
Although there has been measures taken by the Bank of England to ease the costs of borrowing and generally make it easier for businesses and individuals to do so, this then requires the borrowing to be spent investing rather than consolidating other areas of the business.
Unfortunately this is a chance Government needs to take, as they are unable to specify too much where extra borrowings from businesses can be spent. It is a long road ahead for the retail industry, and could ultimately end with e-commerce and the supermarkets the only ones left standing.
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