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Britain ‘needs to invest in SMEs’

Date Added: 20/03/2014  

The UK’s economy needs to be shaken up and rebalanced towards business investments in small to medium-sized enterprises (SMEs), according to an industry expert.

Jean Miller, the chief executive officer of InvestingZone, notes that although GDP figures predict growth for the economy, limited investment in SMEs will mean stunted growth. She adds that small businesses act as an “engine room” for the country and are currently responsible for 48.1 per cent of the private sector’s turnover.

As result of this, any developments in the support, guidance and funding for SMEs would create a more “bullish” attitude about the future of UK businesses and would help the government achieve its growth ambitions. These aspirations include making this country the best place in Europe to start, finance and grow a business.

The troubles SMEs have faced in securing finance from banks have been well documented, and Ms Miller believes that this is one of many barriers that need to be removed to create a business environment that encourages the potential of new companies.

In her opinion, entrepreneurs drive growth but the enterprising spirit is being choked by the restricted flow of capital to potential business owners.

Although the Funding for Lending scheme has been altered to focus entirely on business lending, data from the Bank of England (BoE) reveals that the benefits have been greatest for large enterprises rather than SMEs.

The BoE report also shows that even marginal improvements in the cost of credit for small businesses has failed to improve their access to finance. Many SMEs are charged higher interest rates as they are viewed as ‘riskier’ ventures compared to big organisations.

Ms Miller believes that even though there are tax incentives available for investing in early-stage companies - such as the Seed Enterprise Investment Scheme - there is still a obvious lack of funding available to young businesses.

She concludes that by gearing investment criteria towards company start-ups, there is an opportunity to open up the market of early-stage investing in high-growth firms. Ms Miller believes this will support the country’s economy and ensure the UK’s financial recovery remains sustainable in the long-term.

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