2011 will surely go down as one of the most news-saturated years in recent history.
Every day seemed to bring a new world-shaking story – often, but not always, gloomy. Businesses have endured a turbulent twelve months, and much of the uncertainty looks set to continue into 2012.
Let’s cast our minds back and take a look at some of the bigger business stories of 2011.
Financial collapse v2.0
The ongoing European financial crisis is undoubtedly the biggest story of the year. As 2011 draws to a close the European Union and the eurozone face the biggest challenges in their respective histories. Concern about both sovereign debt and the stability of the global banking system are mounting. If Italy were to default on its debt, many economists predict a global downturn of far greater proportions than that seen after the collapse of Lehman Brothers.
The first round of government spending cuts began to bite this year, with those in receipt of benefits feeling the impact first.
Meanwhile the strategy of austerity faced further criticism, with high profile players including IMF head Christine Lagarde suggesting that countries were “pushing too hard”.
Finance woes continue
At home, small businesses struggled to get access to affordable credit. The major lenders consistently missed the targets set out in Project Merlin, leading to even stronger criticism of the High Street banks.
Meanwhile the cost of overdraft finance continued to rise, with small businesses paying more than at any time since February 2009. Worryingly, as the pressure on small firms increased, the number of ventures being run on personal credit or savings also rose.
Rioting spread across the country during August. Many small businesses were affected, with shops and other premises across the country forced to close.
A number of funds were set up to help small firms cope with the financial impact. The High Street Fund, one of the best-publicised of these, will close in January 2012.
In an effort to tackle spiralling youth unemployment, the government announced a range of new measures that it says will boost apprenticeships. Business secretary Vince Cable announced new “incentive payments” of up to £1,500 for small firms taking on their first employee, while existing efforts will be targeted differently.
Sole trader numbers increase
The number of sole traders in the UK increased during 2011. By October there were 123,000 more one man bands than at the start of the year.
Business rates up
The government announced a significant hike in business rates as retail inflation rose to 5.6 per cent.
In his Autumn Statement the Chancellor said that businesses would be able to defer 60 per cent of the increase, which will hit in April. But it has since emerged that firms will have to pay the full rise up front after the government failed to get the deferral scheme ready in time.
Internship row grows
Pressure on private firms’ use of interns increased during 2011, thanks to concerted efforts from both campaigning groups and the taxman.
The year saw several employee tribunal victories against unpaid internships, with a number of firms forced to pay back wages.
Pay contraction continues
Real-terms pay cuts became the norm in both the public and private sectors as employers tightened the purse strings and inflation rose.
Average private sector pay settlements averaged just 2.6 per cent during the third quarter – well below the rate of inflation. At the top of the ladder, though, things were different, with directors of FTSE 100 companies seeing their pay increase by around 50 per cent.
Taxman hounded out
Controversial HMRC head Dave Hartnett quietly announced that he would be retiring next year, following months of criticism.
The Permanent Secretary for Tax had faced mounting pressure over his handling of a number of high-profile corporate ‘relationships’, with alleged ‘sweetheart deals’ with Vodafone and Goldman Sachs called into question.