Why the new Government needs to back growth for SMEs
A new Labour government, boasting a substantial majority and with a mandate to transform the economy. Our Managing Director Ravi Anand gives his thoughts on what we would like to see from the new government and challenges them to back growth and invest in mid-sized SMEs.
For any incoming Government, there is an ambition to set out plans for what they wish to achieve in the first 100 days. For this new Government, after 14 years of being out of power, they will have their priorities, most likely on improving public services. Yet, it’s clear that Sir Keir Starmer and Rachel Reeves both recognise that if they are to achieve this, it will be determined by improving productivity and growing the economy.
While the previous Government was welcomed with the famous ‘I’m afraid there isn’t any money left’ note, in many ways, Labour may be inheriting a growing economy. The economic headwinds are materially less substantive than 18 months ago. We are seeing improving consumer and business confidence. Inflation is stable and in all likelihood the Bank of England will cut the Base Rate this year.
Businesses have stalled investment activity for the last few years. This has resulted in pent up activity, with a queue of companies looking to acquire or sell and/or a gearing up of investment plans. What's clear to me is that this will come back more strongly if there is a sense of stability and certainty.
What we need now from Labour is detailed policy, proactivity and timelines. In particular, the headline focus on growth and wealth creation needs more substance. We want to understand what the ambition is on areas such as planning reform, AI and tech strategy, net zero and energy and levelling up. Also, there's got to be a thorough industrial strategy, supporting all parts of the UK. Businesses do not want to see chop and change.
As a backer of mid-sized growth business, we would like to see a greater role for the British Business Bank, who are an important conduit for channelling growth capital to the right parts of the market. Our work with the BBB allows lenders like ThinCats to provide growth capital to many more businesses. This could be channelled as more businesses look to improve productivity, invest in tech or reduce their carbon footprint.
Growth does not happen in a vacuum. Businesses will continue to trade, whichever party is in power. But vitally, after many years of upheaval from political, regulatory and geopolitical events, a sense of partnership and crucially some certainty and stability may help businesses get on with what they’re best at. The growth will hopefully follow
