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London Shopkeepers Struggle to Stay in Business Amid Economic Troubles

Britain's famous shops are reeling from troubles in the country's banking sector and hoping that a new stimulus plan will provide a much-needed boost. Margaret Warner reports from London on how businesses are coping with the crisis.

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  • JUDY WOODRUFF:

    Next, how Britain's shop-owners and their customers are being hit by the financial crisis. Margaret Warner reports from England.

  • MARGARET WARNER:

    Britain has famously been called a nation of shopkeepers. And from fruit stands in outdoor village markets to elegant boutiques in London's chicest quarters, small independently owned businesses like these generate more than half of the country's gross domestic product.

    Now these small-scale proprietors are being squeezed hard by Britain's financial downturn or credit crunch, as it's commonly called here. Their trade association says some 50 small businesses a day are being forced to shut down.

    It's a cautionary tale for the U.S., where small business also accounts for more than half of economic output.

    St. Albans butcher Carl Hatfull says his customers aren't buying as they used to.

  • CARL HATFULL, Butcher:

    They shop for cheaper cuts and less of it. We have sold less lamb just lately and more pork, because pork tends to be a cheaper commodity.

  • MARGARET WARNER:

    He could adapt to lower sales volume for a good while if he could still get the working capital he needs to pay suppliers until his customers pay him. But since Britain's bank crisis hit full force in September, Hatfull's bank has cut his line of credit — what the Brits call an overdraft — in half.

  • CARL HATFULL:

    It's been fine for the last 14 years, but all of a sudden, oh, well, you know, your overdraft's too high. We don't have the cash flow that large businesses have, whereas they can last longer. I don't know how much or how long we will last.

  • MARGARET WARNER:

    To meet the bank's demand, Hatfull is in turn squeezing his larger customers. He's told the restaurants and clubs he supplies with meat that they must pay for their orders within a few days.

  • CARL HATFULL:

    It's not always popular. I mean, people don't like to be told that they can't have a month's credit.

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