UK SMEs are ready for growth – but they need Government support
Are businesses in the UK confident in their ability to grow? It can be hard to say for certain: one day Lloyds Banking Group’s Business Confidence survey says optimism is surging, the next day the Institute of Directors is stating it’s at a record low. Who is to be believed?
While most businesses are more interested in inflation and whether the Bank of England may cut rates again this year, it is arguable that the next big political ‘moment’ this year is not the Prime Minister’s party conference speech, but the Chancellor’s Autumn Budget. This July, Chancellor Reeves delivered her annual Mansion House Speech to the City of London to give the financial services industry a sense of direction on what the Government is doing to support the industry.
The Chancellor’s speech hit some welcome notes - reiterating a focus on growth over tax, cutting regulation, and mobilising private capital. Or, to use the Chancellor’s exact wording, stamping out the “boot on the neck of businesses.” There is a considered view that post financial crisis, the UK may have possibly overregulated to the detriment of growth.
Much of the conversation around the Government’s approach focuses on its challenges, but it’s important to recognise some positive steps taken to support businesses. For example, there is now an industrial strategy and an infrastructure strategy that are both credible. There is also a Small Business Growth Plan. It had some good ideas too, for example, there will be a renewed effort to clamp down on late payments – a vital issue given cashflow certainty is critical to any small business. Additionally, there was a promise to reform business rate relief for hospitality and leisure businesses, which will be welcomed.
But this plan won’t be enough on its own and questions remain over how joined up it is with other parts of Government.
While it is possible to be very complimentary to a room full of bankers, insurers and asset managers, and yes, financial services is a vital part of the economy, it’s important that the industry can support the real economy. More taxes and red tape will not help at all. But get it right and there could be those green shoots that the Government desperately needs.
ThinCats’ analysis shows that borrowing fuels growth. Mid-sized firms borrowing over £5 million are sixteen times more likely to hit ‘super growth’ (50% growth above inflation) than they are to face insolvency*. When capital flows, so does business growth.