Another day, another bail out

First Northern Rock, now Bradford and Bingley. And then there are Ebh Bank in Denmark, Hypo Real Estate in Germany, Glitnir in Iceland and more… As the credit crunch tightens, many governments are being forced into bailing out or supporting failing institutions.  This will have an impact on the Government's level of borrowing and the associated costs of servicing this borrowing. Combined with the expected decrease in taxation receipts as a result of a slowing economy it seems inevitable that in the near future the Government will need to tighten their belts or risk increasing the public sector debt to meet their pre-existing funding commitments. As George Osbourne remarked in his speech to the 2008 Conservative Party conference, "The cupboard is bare. There is no more money."

The long term trend of the sector’s rising income is well evidenced, particularly linked to those delivering government contracts. Even before the credit crunch and economic slowdown started, it was clear that the large increases in public spending over the past decade had come to an end.   Spending will now be even tighter, which is not good news for VCOs that receive funding from government. In particular, some areas (those viewed as non-priority areas) are likely to be cut first. It’s going to be even more important now for VCOs to plan for reduced income and identify strategies to cope in this changed environment. This isn’t all doom and gloom though, as was discussed in our recent seminar on the economic downturn.

Last updated at 15:08 Mon 18/May/09.
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Third Sector Foresight

See what charity leaders think about the economic climate (among other issues). NCVO’s third Charity Forecast report will be launched on 6th October. It is based on a survey of over 200 charity leaders – Chief Executives and Trustees – and shows their plans and confidence for the next 12 months.

(The report costs £100 (£25 for NCVO members) and you can also buy a subscription to four issues of the report for £200, or £50 for NCVO members).

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