UK government aims to create 40,000 new businesses by 2013

The government will accelerate its efforts to nurture new businesses, ministers said on Wednesday, seeking to promote private sector growth to help soften the blow from big public spending cuts and job losses.

The Conservative-Liberal Democrat coalition wants the New Enterprise Allowance, which will provide up to 2,000 pounds and loans for the unemployed to start a business, to produce as many as 40,000 new firms over the next two years.

The coalition is slashing departmental spending by around a fifth over four years to help tackle a record budget deficit — cuts that are expected to result in hundreds of thousands of job losses across the public sector and to weigh on economic growth.

Ministers want to see the private sector pick up the slack and drive economic recovery, although economists still expect growth to slow this year as spending cuts and tax hikes bite.

“We will only get our economy back on track when we create a climate in which the private sector can grow and develop,” said employment minister Chris Grayling.

The number of Britons out of work rose for the first time in six months in the three months to October to more than 2.5 million, the latest official data showed last month, nudging the jobless rate close to eight percent.

The allowance, open to anyone who has been out of work and claiming jobless benefits for more than six months, will be introduced in Merseyside this month and will be available nationwide later this year.

Source: Reuters