The weakening of Sterling versus the Euro had a number of contrasting effects on local business, particularly the retail sector. Sales were up on the previous year for many of our businesses but the costs of those sales experienced a significant increase as a result of the currency exchange stituation. Some businesses who saw this coming took the opportunity to invest or re-negotiate supplies from Sterling based suppliers and averted some of the cost increases experienced generally. If 2008 was a volatile and difficult year for local small business, where is 2009 going to take us, in both a local and global sense?
As the ink on this edition of the magazine dries, the world will have been paying close attention to the inauguration of a 44th President of the United States of America and Barack Obama will be feeling the weight of the world's eyes upon him as his first months in office pass by. Of all the problems he inherits with the keys to the White House, Mr Obama will inevitably be drawn to the serious economic problems his country and the rest of the world at large faces in 2009. His focus will be, according to his campaign promises, on creating jobs and building the foundations for business which can lead the country out of the recession and on to a new environment of stability, accountability and regulation. The success of this recovery, he believes, lies with the success of small business.
Locally, small business must also be the priority. With our banks currently offering exorbitant rates for credit lines and loan facilities to local business despite the plummeting Bank of England base rate, business owners struggle to make ends meet and pay their suppliers. The difficulties being endured by our small businesses are every bit as real as those stories we hear about companies in America and the UK bleeding jobs and skyrocketing unemployment. Some argue that the local economy is bolstered by the success of the Finance Centre, Gaming industry and our Tourism product but, in the current climate, nothing should be taken for granted.
The European Court's ruling in recent weeks was no doubt positive. Question marks do still remain in relation to the legislation and implementation of the new corporate tax regime which means that the local finance industry still finds it hard to go out there and market the corporate tax product to potential investors. The implementation of the 10% corporate tax across the board does also mean that certain larger companies within the gaming and insurance sectors based on the Rock are having to ponder paying tax at a level they certainly will never have anticipated when they first arrived here. And as for tourism, a global downturn will certainly reduce how much people are able or willing to travel and, in that respect, the continued profitability of our tourism sector cannot be taken as a given.
There are, of course, those who will argue that to make such negative assertions about our economy is to scaremonger unecessarily but the reality is that no one knows, in these uncertain times, what 2009 will bring in terms of the finance, gaming and tourism sectors. Pointing these issues out, encouraging debate and addressing the community's concern in these matters is key to our economy's survival.
We simply cannot afford to stand idly by as a community and allow our small businesses to run out of options while we continue to face challenges to the other pillars of our economy. The current credit difficulties will, at some point, take their toll on local business and the onus must be on the Government, in consultation with local business, the Federation of Small Businesses and the Chamber of Commerce to work together to develop initiatives that safeguard the interests of our business community.