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Riots and Looting: Who Will Come to the Aid of the Local Economy?

Mindless, senseless damage was witnessed throughout Britain last week as riots spread around the country, amongst the chaos, violence and looting, hundreds of small businesses were attacked
Finance, Lifestyle, World - 16 August 2011   Download IconContent available for download:  
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Communities have been hit hard after this recent rioting and looting spread to cities UK wide. Although many chains were targeted, up to two thirds of the affected businesses were independents already struggling to survive testing economic conditions. Many have been left homeless or jobless, and livelihoods lost, as the fragile community attempts to regain stability through its local businesses.

The England riots could knock Britain’s economic recovery off course and force hundreds of small, and otherwise viable, companies into bankruptcy. Those who weren’t directly looted were still affected as research by the Local Data Company suggests many thousands more lost trade because local town centres were closed off by police, or warnings of violence meant they chose to close early. The UKs service sector has been hurt by the widespread rioting and looting, which makes up three quarters of total UK GDP that only grew by 0.2% in the last three months anyway. Insurers estimate the rioting reached £100million worth of claims before it even hit Manchester and Gloucester.

In response to the Evening Standards SOS campaign launched last Friday (12th August), RBS NatWest has today made £10 million available in a fund to help those small businesses that have been affected by the England riots. Boris Johnson praises RBS for "recognising its social responsibility" and for acknowledging "the reality that unless we help those small businesses who are the lifeblood of our high streets at a time like this, they will not survive and we will all suffer". The fund will provide interest free loans of up to £25,000 to small business customers for up to 6 months and give small businesses a critical rest bite whilst they wait on financial support from either the Government and/or insurance companies.

The reality is that aside from the emotional stress, many affected businesses cannot physical operate today – their struggle with short term cash-flow is NOW. Every day that goes by without it increases the risk of bankruptcy for many businesses in the affected areas in the UK.

. Introduction:

Communities across the country have been affected by the recent acts of rioting and looting, with individuals left jobless, even homeless and livelihoods lost. Hundreds of otherwise viable small businesses could also be forced into bankruptcy. Britain could potentially be knocked off its slow economic recovery as communities are attempting to regain stability and order. The PM and the Government are making the right noises and gestures, supporting efforts of others and have a ‘watch this space’ attitude towards any concrete help they can declare… but the reality is that short-term cash flow problems for local affected business is now, and every day that goes by without it increases their risk of bankruptcy! In response to the Evening Standards SOS campaign launched last Friday, RBS NatWest has made £10 million available in a fund of interest free loans to help those affected. Backed by Boris Johnson, they are calling on other banks to step up and do the same.

But are these ‘loans’ a solution that will really help our community or will they just plunge our affected businesses deeper into debt in this already unstable economic climate?

Joining us to discuss this further is Peter Ibbeston, Head of Small Businesses for RBS and NatWest.

. Suggested Questions:

How have businesses in our area been affected?

How will your loans specifically help small businesses in our area – isn’t it just a case of getting small businesses into more debt that they may not be able to pay off?

So how are communities and small businesses going to recover from the recent rioting?

How have and will the riots affect the UK economy on a wider scale?

Where can the UK economy expect to find itself in 6 months?

What advice do you have for small businesses that have been affected?

Where can we find out more information?