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2008 credit crunch, banking crisi, business, MP expenses house prices property banking crisis financial bubble, New Year

New business needs its own Jarrow March.

At a New Year party, I met a man who made the smallest television screen in the world. It’s in the Guinness Book of Records. He even showed me a working model of his tiny TV which, I can confirm, was very small indeed. As flat screen televisions get larger and larger, you might wonder why on earth anyone would want to make a screen that is not much larger than a pin head. But it turns out that miniaturisation is the future of video.
In ten years everyone will be playing Grand Theft Auto wearing special glasses with these video screens embedded in them, projecting images directly onto the retina. Surgeons doing delicate operations will use micro video, as will engineers doing complex procedures, where you can’t just pop out and consult a manual. Tiny TVs will also be used in cameras, mobile phones, robotics. We’ll probably be wearing ties covered with them them.

All well and good. But there’s a couple of things you need to know about this Scottish invention. The firm that developed it, Micro Emmissive Displays, went bust last year and the man who told me about it was made redundant, and has had to find contract work in the South of England. The reason they couldn’t develop this invention further was simple: credit crunch. Another piece of ground-breaking technology slips out of our grasp, just like wind power and marine energy, to be developed elsewhere.

When economists like Professor David Bell warn of a decade of decline in Scotland following the banking crash, this is what they mean. These advanced small businesses are supposed to be the economic future, but like silicon glen, they are already becoming part of the past. Manufacturing plants in China will probably be turning these things out by the million in a few years. The firm was based at Kings Buildings in Edinburgh and was a technology spin off from research work conducted at Edinburgh and Napier Universities, so a lot of public money had been put into this project, one way or another. MED was one of a number of casualties of the banking crisis over the past eighteen months. Even one of the most established hi-tech firms in Scotland, Wolfson Electronics, which made chips for Apple’s iphone, was hit by a share price collapse.

Now, I don’t want to be accused of negative nationalism here: scientific discoveries benefit humanity wherever they are developed and we should of course be celebrating these achievements of the Scottish intellect, just as we do MRI scanners and Dolly the Sheep. But the micro-television story is a microcosm of the Scottish, indeed the British condition. We have lots of ideas, but the only ones we seem to develop are the stupid ones that bankers dream up to speculate on asset prices.

We need lots of small businesses developing the technologies created by our world class universities. MED employed only fifty people, but that doesn’t make it insignificant. 93% of businesses in Scotland employ fewer than 10 people and they account for 40% of all private sector employment. The politicians are aware of this, naturally – especially the Scottish National Party which wants greater tax incentives for businesses to locate and develop in Scotland. That’s what got Ireland off the ground – though low corporation tax didn’t prevent the Celtic Tiger crashing to earth again.

The UK government insists that it is busting a gut promoting enterprise. There seem to be no end of business gateways, start up funds, small business incubators, innovation counsellors and other business quangos paying themselves a lot of money to hold conferences and produce reports. But talk can’t replace cash, and it is credit that small businesses desperately need, not counselling. 70% of Scottish small businesses, according to a recent poll, feel they are being cold-shouldered by the banks.

Personally, I blame the business organisations. Instead of griping about increases in national insurance and the loss of non-domicile status for tax exiles, why aren’t they beating a path to the Bank of England to release some serious credit? Why not a Jarrow march of small businesses to Threadneedle St to demand a government rescue for manufacturing industry? What have they got to lose? Hundreds of businesses are going bust every day because they can’t get credit from banks which are sitting on hundreds of billions of public money.

Our delinquent banks can borrow from the Bank at 0.5% – the lowest interest rate in three hundred years – but they only lend it out again at rates of 10% pocketing the difference. Why not let businesses borrow directly from the Bank of England at near base rate? Why should banks have a monopoly of credit in the first place? City insiders scoff at such an idea as financially naive, but sometimes you have to ask the obvious question to find that there isn’t actually a sensible answer. There would need to be a bank for industry to act as an intermediary, of course, but I don’t see why government couldn’t handle this using the semi-nationalised banks as a base. The alternative is quite literally the death of the Scottish technology sector. Really, if we don’t wake up here, and soon, Scotland could become an old people’s home with a bit of tourism and whisky. That’s the big picture.

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About iain2macwhirter

Writer and journalist.

Discussion

3 thoughts on “New business needs its own Jarrow March.

  1. IainThis must be your best article yet on just why Scotland needs independence as soon as possible.Just when do you expect an improvement in the current situation, or any of your ideas to be implemented as long as Scotland is in this union?

    Posted by Dubbieside | January 6, 2010, 12:13 pm
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