How the spending review will affect the translation industry?

Are these cuts getting us out of the recession or will they undermine the economic recovery? How will small business be affected?

There is no consensus between the experts about the effectiveness of the spending review to put the country back on track. While some experts believe that the planned £81bn in cuts are paramount to tackle the huge deficit others consider that the proposal is a “huge gamble” and could plunge the economy back into the recession.

Economist and former Bank of England policymaker David Blanchflower said the chancellor's cuts will 'make things worse'. The Institute for Fiscal Studies (IFS) also considers that the entire package of tax and benefit changes is regressive. Our concern is about the effect that this will have on small businesses, including translation services. John Hawksworth, chief economist at Price Waterhouse-Coopers has pointed out that: “Business services and construction would be among the industries hardest hit”.

Government departments will be spending significantly less on products and services provided by the country's smaller companies. Taking into consideration that the central government procurement market represents about £26.6bn of business for UK SMEs, the spending cuts will have an effect on SMEs. Manos Schizas, SME Policy Adviser at ACCA (the Association of Chartered Certified Accountants), states that:  “for every £1 of procurement cuts overall, SMEs will lose about 27p”.

Many UK-based translation companies rely heavily in public institutions and translation services has always been in the agenda as a way to provide equal access to public services to all the members of our multicultural society. Interpreting is another big area of spend by Government. The public bodies which spent the most on interpreting and translation services in 2008/2009 were the Metropolitan Police (£10.6 million), the Department for Work and Pensions (£4 million), West Midlands Police (£2.3 million), the Welsh Assembly (£2 million) and the Crown Prosecution Service (£1.5 million).With the spending cuts, these services will have less money to spend on this particular area.

The purpose of this review is to stimulate economic growth but it is still too early to predict the effectiveness of this measures. According to Tom Bewick, Chief Executive of Enterprise UK, “it is very important to encourage people to start new businesses and create new opportunities”.  But, under the current climate with the upcoming VAT rise and people not spending enough money it is unclear if the Government measures are adequate to incentivise the growth of the SME businesses. The uncertainty created by the cuts might certainly damage business in general mainly because expectations play a main role in economics.