In the aftermath of the EU referendum, we were left with two important questions that needed answering. Firstly, how would Britain’s private sector respond to our decision to leave the European Union? And secondly, what would Brexit mean for the UK’s private investment landscape?
In our blog last week we highlighted that the early signs had been positive for the health of Britain’s private sector; consumer spending rose 1.4% in July and there was a surge in SME funding enquiries at the start of August. Confidence among consumers and businesses evidently remains high.
Furthermore, a study released by CitySprint this week revealed that UK SME leaders and decision makers are confident Brexit will cause no significant disruption to their businesses. In fact, just 14% of small businesses thought leaving the EU would have a notable impact on them, while 68% said they are either as confident or more confident about their business than they were 12 months ago. The private sector has demonstrated impressive resilience – supported in no small part by the unfaltering confidence of SMEs, which account for 99.9% of it.
Moving to our second question, to understand what Brexit means for the UK’s private investment landscape, we recently commissioned our own research which found that investor sentiment towards SMEs as an investment opportunity remains resoundingly high. In fact, over half (52%) of British investors said last month that they will support UK SMEs through private investment channels despite Brexit uncertainty – equating to 12.9 million investors. The full findings can be found in our latest report: Understanding Investor Sentiment in the Wake of Brexit.
The results illustrate that there is clearly a strong appetite among British investors to back SMEs. This was supported by a new chart from City A.M. which showed that London’s start-ups have received more investment in 2016 than in any other European city. However, for Britain’s private investment sector to enjoy long-term growth, it is of critical importance that investment activity – particularly SME investment – is not focused on London alone.
Positively, last week the new Prime Minister Theresa May announced that she was going to back the Northern Powerhouse initiative. A concept devised and driven forward by the now former Chancellor George Osborne, May’s decision to stand by this project to create a more powerful network of business ecosystems across the north of England is an important one. Developing vibrant communities of small businesses in a variety of regions will help create an even more robust and attractive private sector in the UK.
While London’s SMEs can often steal the limelight, there is a huge number of innovative, high-growth small businesses operating out of cities across the length and breadth of the British Isles. Indeed, 78% of the UK’s fastest-growing businesses are based outside of the capital. To champion these businesses and the SME investment opportunities on offer in all parts of the UK, IW Capital launched the SME Heatmap earlier this year – the interactive motion infographic highlights the sectors and regions that are driving small business growth in Britain. Access the SME Heatmap here.
In the wake of the EU referendum, there have been positive signs for both private investors and SMEs. But education and communication will be key for this continue, with both SMEs and investors requiring assurances regarding their future and, more generally, the future of Britain’s private sector. IW Capital will continue to assist in this challenge by providing expert insights, industry reports and valuable resources such as Understanding Investor Sentiment in the Wake of Brexit and the SME Heatmap.