Like many, the first thing I saw of Northern Ireland as I flew into the city airport, was the two huge yellow cranes adorning the skyline.  The Harland and Wolff cranes stand testament to Northern Ireland’s entrepreneurial past which once boasted the largest shipyard in the world and the first aircraft manufacturer in the world.

As post-conflict Northern Ireland attempts to move its economy from public sector driven to private sector driven, or, from a wealth burden to wealth creation, we look for an economic model to enable this.

One such model seems to be the venture capital driven valley model.

But is this good for us?

Firstly, I would say that this model requires a culture where entrepreneurialism is encouraged and failure seen as learning.  Sadly, I would say that the culture of Northern Ireland does not encourage risk taking.  Civil service and the “professions” (read – people who charge you for stuff you don’t want done – accountants, lawyers, medical etc.) remain the safe heavens of preference.

Secondly, I believe this model requires access to large local markets to succeed. 

One of the first, some argue the first,  business computers was manufactured by a British company.  The LEO computer. Many say one of the main reasons that they failed to gain global dominance was that the domestic economy was simply not big enough for more than a few sales whereas,  shortly after IBM entered the US market and sold hundreds.  As a result they became big enough to be able to globally market and sell their product.

So, whilst building global product is desirable, it is difficult to achieve without first building local product where learning your market is much cheaper. 

So what is the German model?

I am writing this from the West of Ireland – a heaven from the intrusion of the internet.  Here in my Leitrim farmhouse I have no phone – I don’t just mean a weak signal on the mobile – I mean not even a land line, no internet, two TV channels, electricity that dims when the oven is turned, water pumped from my own well, even my own sewage works – known as a septic tank.

I do have a radio.

I have always found Irish business programmes to be excellent.  In Northern Ireland business coverage is a couple of 10 minute slots from Eddie O'Gorman on Radio Ulster, or some national coverage from Radio 4.  The Irish, however, seem to take there business much more seriously with programmes such as today FM’s “The Last Word” and The Sunday Business Show giving extensive business review and comment.

As I listen this morning I began to despair.  The state of the Irish economy has made listening to theses programmes rather like the funeral of a revered celebrity.

Then I remembered the glass is still nearly full.

UK GDP Growth from the Office for National Statistics

Yes the economy has shrunk over the last 3 years – but over 90% of it is still there!  Some sectors of the economy, mainly construction related, have contracted much more sharply but for those of us not directly involved in these or able to sell to other sectors we should remain focussed on profitable and growth areas of our business.

In my ‘O’ level in economics there are broadly are two causes of inflation – Cost-push inflation and Demand-pull inflation.

These are pretty self explanatory – cost-push being increased prices of raw materials and demand-pull being increases in demand allowing the market to set a higher price.

The MPC has interest rates as a tool to keep inflation in check.  Interest rates affect consumer spending and so put a kerb on consumer demand hence mitigating demand-pull inflation.

However, it is fairly plain to me that we are not suffering demand-pull inflation – the UK retail sector is not exactly in rapid growth.  According to the office of national statistics -

“Over the period February 2011 to March 2011 the retail sales volumes increased by 0.2 per cent and the value of retail sales increased by 0.1 per cent.”

Our current inflationary woes seem to be caused mainly by high oil and commodity prices and historically weak sterling.  Raising interest rates at this point would, in my opinion:

1. Stifle the current recovery – particularly in weaker UK regions such as Northern Ireland which are not yet out of recession,
2. May strengthen sterling leading to decreased competitiveness of UK exports,
3. Not reduce inflation which currently seems to be mainly cost-push

So far I’ve not mentioned the other influencer – monetary policy.

Monetary policy is about how much money is in circulation.  By putting more money in circulation through “Quantitative Easing” (QE), the Bank of England made the pound in our pocket worth a bit less – result – inflation.

Now that QE has stopped, I would expect the value of the pound in our pocked to stabilise.

So, on balance, the decision for the MPC on 4’th and 5’th of May should be simple, hold firm on interest rates.  I would expect this to remain the case until we see significant demand-pull inflation.

I would also expect inflation to continue to fall away over the coming months as cost-push inflation falls as commodity and oil prices stabilise or fall.

In the UK, the standard rate of VAT (T1) is to change to 20% from 4 January 2011.  As with the changes over the previous two years, Fusion Accounts users will need to do nothing!

The new VAT rate will be available for your financial transactions from 7 December 2010 for any transactions that you are preparing now that require the new rate.

From 4 January, unless you indicate otherwise, all products having a 17.5% rate will be changed to a 20% rate as will any other defaults using this rate.

For more information on the rate change please refer to HMRC.

OK, let’s start by clarifying that an ‘A’ level in economics does not make me an economist and I hardly consider myself an expert in globalisation but if there is one thing that the recent crisis has solidified in my mind it is the importance of maintaining an independent currency.

I’m not a Euro Sceptic, although I’m sure like most people I would like to see Europe become less bureaucratic and expensive and more democratic, but, seeing as few of us bother to vote or take an interest in Europe then we’ve only ourselves to blame on that front”.More...

HMRC have issued detailed guidelines on penalties for late payment of PAYE deductions due for a period starting on or after 6 April 2010 for:

• monthly or quarterly PAYE (Pay As You Earn)
• student loan deductions
• Construction Industry Scheme (CIS) payments
• Class 1 National Insurance contributions (NICs)
• annual payments of employers' Class 1A NICs
• annual PAYE Settlement Agreements (PSA) payments
• PAYE determinations or charges raised

These penalties will be up to 4% of the total amount that is late for a given tax year.

Full details can be found on HMRC’s web site.

Just had a call from a marketing agency who specialise in mailing lists who I used several years ago.  They had sent us a special offer in the post which had been returned to sender. 

Could they confirm our new address?

Rain on a wedding day is just bad luck.

I am continuously reading about how I should be using Twitter and other social networking to as part of my marketing activities.  Whilst agreeing with this in principle it is quite difficult to put into practice and I’m never really too sure of the value.

I have a personal twitter account @stuartm9999 and we also have a twitter account for Fusion Accounts - @FusionAccounts.  Although I find it easy to tweet verbosely on my personal account the product account is a bit more sparse than perhaps it should be.

Then this morning I got a great tweet from an unexpected source – Belfast City Council.

On Saturday I tweeted that I had received my new food recycling basket from Belfast City Council.  This morning I received a direct message from them with a link to further instructions on how to use it.

This has really lifted my perception of them as an organisation and consequently my belief in twitter and other “social networking” as a marketing tool.

Although many business owners do not wish to understand the intricacies of double entry bookkeeping, they are interested in invoices.  By understanding how an  invoice is processed through the books you will gain understanding of the bookkeeping process but also how your accounts can be used to assess how your business is doing.

A businesses books are made up of a set of accounts or (nominal accounts) with transactions debiting and crediting these accounts such that the sum of the balances of these accounts is always zero.  There are also accounts for customers and suppliers – although these do not form part of the businesses financial position.

More...

Two more bank reports are now available.  The Debit Transactions report shows all the transactions that debited an account and the Credit Transactions shows all the reports that credited the account.

These reports are available on the Bank Reports page of the Bank menu.