Corbyn calls for banking reforms to support UK SMEs
Labour Party Leader Jeremy Corbyn used March 2016’s British Chambers of Commerce annual conference to call for change in the UK banking sector. Mr Corbyn believes it's necessary to “[encourage] credit unions and small business support” and establish a “National Investment Bank” that targets more than “very quick returns.” Any significant reforms will take time to materialise, so what does the current funding landscape look like for SMEs?
UK start-ups at record high
Corbyn’s comments come at a time when the UK’s SME numbers are on the rise. After 2014 saw a record 500,000 start-ups launched, that level increased to 600,000 in 2015. Over the past five years, 2.6m new businesses were created. At present, there are many UK residents expressing an entrepreneurial desire, but Corbyn is concerned they are not getting lasting support.
In February 2016, London Stock Exchange Chief Executive Xavier Rolet spoke of how “new, nimble, innovative start-ups have the potential to transform Britain.” Nevertheless, Rolet believes many UK start-ups will fail if they don't have the “environment and support they need to scale up”.
Rolet also stated there are “2.7m UK SMEs who wish to grow but do not,” saying the UK economy has an “obsession with using debt to try and finance growth” – an approach that “does not encourage long-term growth”.
Government support for SME funding
However, recent activity by the government-owned British Business Bank (BBB) suggests some decision-makers are trying to encourage longer-term growth. After funding the £100m Hitachi Capital (UK) PLC facility in October 2015, BBB provided £51m in February 2016 for LDF Group to establish a similar facility.
Both investments were made to increase funding for UK SMEs, and BBB Managing Director for Wholesale Solutions Reinald de Monchy “[anticipates] further transactions throughout 2016.” In January, LDF invested more than £40m in businesses, suggesting support is out there for some.
While Corbyn’s support of UK SMEs and BBB's recent activity are positive signs, businesses should heed Rolet’s warning of uncertainty by maintaining secure cash flows and reserves. Enforcement Agents like Dukes Bailiffs can help your business do this in a transparent and ethical manner.
