The 2017 Spring Budget was delivered at a pivotal moment for the British economy – with investors and businesses awaiting further advice on the nature and timing of the Brexit negotiations. With the triggering of Article 50 taking place on 29 March, this fiscal statement sought to build upon the investment initiatives announced in the 2016 Autumn Statement and delivered targeted solutions to support Britain’s scaling businesses.
During his speech, Chancellor Philip Hammond acknowledged that the UK’s economic growth in the 12 months leading up to the Budget had outpaced that of the United States, France and Japan and trailed only Germany amongst the world’s developed economies. Productivity, digital skills and infrastructure were key themes, with the Chancellor seeking to address any remaining impediments inhibiting the scalability of the UK’s dynamic private sector businesses.
The UK’s 5.5 million SMEs can find reassurance in the Budget’s commitment to re-evaluate proposed changes to business rates. Hammond highlighted that ahead of this re-evaluation, the government will commit to a package of business rates reductions totalling £9 billion, in addition to permanently doubling the rate of Small Business Rate Relief to 100%, and raising the threshold so that 600,000 small businesses are exempt from the tax. In doing so, the Budget reaffirmed to Britain’s entrepreneurs that the government considers SMEs to be a vital component of its economic agenda for Brexit.
Targeted reforms were also delivered for businesses ranging from local pubs to the digital economy. Disruptive technology companies were the beneficiaries of a £270 million investment that will ensure their operations are supported by leading investments in digital infrastructure. Chancellor Hammond also announced a further reduction in business rates for 90% of the nation’s pubs – offering a £1,000 discount on business rates bills in 2017 for all pubs with a rateable value of less than £100,000.
The 2017 Spring Budget built upon the 2016 Autumn Statement by recognising the importance of SMEs across the nation in supporting private sector growth. Britain’s bustling community of tech companies has performed significantly well over the past 12 months – contributing close to £100 million to the economy each year. Most significantly, digital tech investment has risen to £6.8 billion, 50% higher than any other European country. Demonstrating the disruptive capabilities of the UK’s regional SMEs, 72% of UK digital tech investment in 2016 was pooled into regional clusters outside of London, with, tech businesses attracting more than £9.2 billion of funding in total. Cambridge and Edinburgh are the most popular investment destination for British tech, presenting exciting prospects for scaling businesses in need of growth capital. Find out more about the UK’s disruptive industry here .
Government commitments to scaling SMEs in 2016
Prior to the Budget, the government had already enacted a series of initiatives to support local business growth. In the 2016 Autumn Statement, the government reaffirmed its commitment to the so-called ‘devolution revolution’, granting local government bodies the funding to support local business growth through targeted initiatives. Most significantly, Chancellor Hammond allocated £556 million to Local Enterprise Partnerships (LEPs) in the North of England, £542 million to the Midlands and East of England, and £683 million to LEPs in the South West, South East and London
Overall, the 2016 Autumn Statement championed the role of British SMEs in driving economic productivity and long-term growth. Representing 99.3% of all private businesses, SMEs generated revenue of over £1.8 trillion in 2015 – 47% of the UK’s total private sector turnover. They also represent the largest source of employment, hiring over 15.6 million people, or 60% of Britain’s total private sector workforce.
IW Capital launched in 2011 to facilitate private investment into Britain’s growing community of scale-up businesses. With 40 years’ collective experience, our private equity team has helped secure growth capital for the likes of BorrowMyDoggy, WeSwap, Square Pie and Brewhouse & Kitchen. To share the expertise we have developed, we launched the SME Heatmap: Sectors and Cities that Scale – a motion infographic profiling the regions, cities and industries driving the next ten years of SME investment.
This interactive map reveals a series of insights into how SME firms are driving change within these high-growth sectors. Moreover, the SME Heatmap, continues to be regularly updated to reflect developments in Britain’s private sector, and profiles the cities across the length and breadth of the British Isles that are providing the infrastructure to support this very progression.
This unique project forms part of IW Capital and Crowdfinders’ joint Race to Scale initiative, a £100 million funding drive dedicated solely to Britain’s scaling businesses. Launched in partnership with Crowdfinders, the UKBAA, Seedrs, SyndicateRoom, Smith & Williamson, Envestors, Crowdcube, and international crowdfunding partner Invesdor – the nationwide call for SMEs is ongoing as we source the scale-ups with immense growth potential.
Construction and manufacturing have long been two stalwarts of the British economy. The UK is the 11th largest manufacturing nation in the world – according to the latest government statistics, the industry employs around 2.6 million people in Britain and accounts for 10%, or £151 billion, of national economic output. The construction industry, meanwhile, contributes around 6.5%, or £103 billion, of the UK’s economic output, employing more than 2 million people.
Despite their size and long history, these sectors are populated largely by SMEs. In fact, almost a quarter of the UK’s entire SME population – consisting of 5.4 million businesses – ply their trade in construction or manufacturing.
Global competition has challenged British firms when bidding for construction and manufacturing projects, forcing them to become more cost-effective. Innovative small companies have helped drive the UK forward in this area and will continue to do so over coming years. After a difficult period in the aftermath of the recession, the manufacturing industry is predicted to return to growth in 2016, while Experian has forecast that total construction output will hit £142 billion in 2017, up from £131 billion in 2015.
In Scotland the construction sectors has already shown clear signs of expansion – 3,445 new construction businesses were created between 2014 and 2015. Furthermore, it was announced in February 2016 that Scotland’s manufacturing industry, which represents over half of the country’s international exports and investment in research and development, was to receive £70 million of government investment, including the creation of a new centre for excellence and skills academy.
The UK’s manufacturing industry is the 11th largest in the world, employing 2.6 million people and adding £151 billion to national economic output
Construction adds £103 billion to the UK’s economic output and employs 2.1 million people
Almost a quarter of all the UK’s SMEs operate in the construction and manufacturing industries
Total construction output in the UK is forecast to hit £142 billion in 2017, up from £131 billion in 2015
The British fashion industry is renowned for pushing boundaries, and has paved the way for some of the most iconic style movements in recent history. Today, the sectors continues to thrive, as it boasts the largest employment rate of any of the UK’s creative industries, with an estimated 797,000 jobs in British fashion. Data released by Oxford Economics in 2015 estimated that fashion’s direct value to the UK economy stood at £26 billion, marking a notable increase from £21 billion in 2009. Mintel figures from the same year revealed that the ready to wear sales of women’s clothing were valued at £27 billion in 2015, which is expected to increase by 23% to £32 billion by 2020.
E-commerce has transformed the way the UK shops for clothing and has also seen shoppers increase their spending on clothes. Online fashion purchases in Britain totalled £12.4 billion in 2015, a 16% increase from the £10.7 billion spent the previous year.
Although London is arguably one of the leading fashion capitals of the world, Birmingham and the wider Midlands region now house a number of clothing companies’ head offices. Named “fashion’s golden triangle” by Drapers magazine in 2011, due to the concentration of high-street brand headquarters such as Next, the region welcomed the addition of online clothing company Asos in 2013.
Fashion is the largest employer of the UK’s creative industries, boasting 797,000 jobs
Oxford Economics data from 2015 estimated that fashion’s direct value to the UK economy equates to £26 billion
Sales of ready to wear women’s clothing reached £27 billion in 2015, with figures expected to rise by 23% to £32 billion by 2020
Online fashion purchases in Britain totalled £12.4 billion in 2015, a 16% increase from 2014
Britain’s digital industries are booming. Over the last eight years the number of tech firms in the UK has doubled – today, around 1.5 million people are employed by digital companies. What’s more, the turnover of these businesses is growing 32% faster than the rest of the country’s economy.
The digital sectors is dominated by small, innovative companies. In fact, 98% of digital tech companies in the UK are labelled as ‘small’. However, their size is not stunting their ambition or confidence – 90% of digital tech companies say they expect revenue to grow in 2016.
London’s Tech City – as the name would suggest – is often hailed as the UK’s thriving hub for digital businesses. However, the rise of this industry has been experienced across the entire nation, with 74% of the UK’s digital firms located outside of the capital. Of all the regions to witness their own emerging digital communities, the South-West boasts one of the most advanced. The Bristol and Bath area is widely recognised as a welcoming home for tech start-ups, with the number of people employed by digital firms in the region (61,653) second only to London.
Small businesses account for 98% of the UK's digital economy, which employs over 1.46 million people
In 2016 UK digital tech investment reached £6.8 billion, 50% higher than any other European country
Nearly 70% (68%) of UK digital tech investment in 2016 was in regional clusters beyond London
Digital technology businesses are growing 32% faster than the rest of the UK economy
74% of the UK's digital companies are located outside of inner London
Product Service Sharing
Do you have an empty corner of your office that’s gathering dust? How about an unused car parking space on a busy road or a huge garden that someone could camp in? Well, if you do, businesses now exist that allow individuals or companies to maximise their assets of all shapes and sizes by sharing them with others for a price. Welcome to the sharing economy.
The sharing economy is quickly becoming immensely popular among the UK public. For the lender, they can generate extra revenue out of resources they already own, such as property, transport, skills, services or space. The borrower, meanwhile, can gain access to resources as and when they need it for a fraction of the cost of having to actually own the asset.
This is no fad either, as highlighted by PwC. The company states that the modern sharing economy can be broken down into five main sectors: peer-to-peer finance, online staffing, peer-to-peer accommodation, car sharing, and music and video streaming. As we entered 2015, it was estimated that these five sectors generated $15 billion in global revenues. Over the next decade product service sharing is expected to take off – by 2025 it is predicted that these five sharing economy sectors could generate revenues of $335 billion. The UK is going to take a healthy slice of this pie, too, with Britain’s sharing economy expected to generate $15 billion in revenues in ten years’ time.
As part of the Northern Powerhouse initiative, Chancellor George Osborne revealed in his 2015 Budget that Leeds and Manchester were going to become sharing economy hubs. Leeds in particular was chosen because of its innovative small business community – the city has the highest concentration of digital, data and technology innovators in the UK. It also hosts a third of Britain’s internet and has a creative sectors worth over £3 billion per annum.
The modern sharing economy consists of five main sectors: P2P finance, online staffing, P2P accommodation, car sharing, and music and video streaming
At the start of 2015, these five sectors generated $15 billion in global revenues
By 2025, it is predicted these five sectors will generate revenues of $335 billion
The UK’s sharing economy could be worth $15 billion to the economy in ten years’ time
Fintech, or financial technology – to give it its full title – is one of the hottest trends affecting both businesses and consumers today. The range of innovative new technologies being developed by exciting companies is turning the financial services world upside down, toppling the incumbent behemoths through the creation of more efficient tools and systems.
Last year, £8.9 billion was invested into fintech globally. The UK received over 7% of this total investment – a staggering £647.5 million – which underlines the country’s position at the forefront of this booming industry. Boasting a value of £6.6 billion and 61,000 people employed within it, Britain’s fintech controller__item is larger than that of Australia, Germany, Hong Kong and Singapore combined
The jewel within the UK’s fintech crown is London; the capital consumed 53% of all fintech investment across Europe in 2015. The city has a thriving fintech ecosystem which is supported by capital investment, regular events and accelerator hubs that enable small businesses to flourish and grow.
Small businesses are the ones truly benefitting from the fintech revolution. It is innovative high-growth firms that are creating the new technologies and, moreover, it is smaller companies that are embracing the change. A recent survey of small business leaders uncovered overwhelming support for fintech firms – 85% said fintech companies demonstrate a better understanding of their business’s needs, 94% stated they delivered a more tailored proposition, and 88% claimed they provided greater transparency on fees. With such significant support for the new kids on the block, it is predicted the UK’s fintech controller__item will expand exponentially over the coming years.
The UK’s fintech controller__item is valued at £6.6 billion and employs 61,000 people
£647.5 million was invested in UK fintech in 2015
Fintech deal volumes in Britain have been growing at 74% a year since 2008
53% of all investment into Europe’s fintech market in 2015 was directed into London
Manchester has traditionally been the economic powerhouse of the north of England. Boasting one of the most diverse local economies in the country, the city has successfully transformed from an industrial and manufacturing metropolis into a cosmopolitan space supported by world-leading business infrastructure. Through its varied and knowledge-based economy, Manchester is becoming renowned for its digital, creative, sporting and professional service industries – all of which are heavily populated by SMEs.
The dynamic and vibrant character of Manchester is a product of the city’s leading universities. With 80,000 new students arriving each year, Manchester has the largest student population of any European city. This is supported by a modern airport – Manchester Airport – which flies to more destinations than any other British airport. All these factors have positioned Manchester at the forefront of business development, currently ranked as the 2nd and 12th best place to do business in the UK and Europe respectively.
The city has benefited from several waves of government initiatives geared towards business development in the north, the most recent being the Northern Powerhouse. Through this strategy, the British Government has listed £24 billion worth of construction projects currently open for investment. A number of these projects are based in Manchester – extending from residential and commercial developments to the upgrade of existing transport infrastructure. The high-speed trainline (HS3) between Leeds and Manchester, for instance, will ensure fast and efficient connections across the key regional hubs in the north of England.
As one of the nation’s rising oncology companies, Manchester-based Incanthera has received a £150,000 investment pledge through the Race to Scale initiative
Manchester’s economy generates £56 billion a year
In 2015, there were approximately 105,000 private businesses in Manchester, employing 1.4 million people
Greater Manchester has the largest creative and digital clusters in the UK, employing 63,500 and generating £3.1 billion each year
Employment growth in Manchester is set to reach 3.8% between 2015 and 2020
London provides 22% of the UK’s entire GDP and is home to almost a million businesses that account for around a fifth of Britain’s private controller__item firms. While companies of all sizes and sectors operate in London, the most prolific industries include finance, commerce, technology, digital and fashion.
London has three universities in the top ten of The Times’ world rankings of higher education institutions. Coupled with its diverse, multi-ethnic population, this provides businesses in the city with a vast talent pool of potential employees to hire from. The capital also boasts excellent transport links, incubator hubs, accelerator programmes, meet-up events and office sharing spaces to encourage innovation and business connectivity, and to foster the city’s start-up communities.
Tech City has come to embody London’s booming start-up and scale-up scene. The area around Old Street and Shoreditch, otherwise known as Silicon Roundabout, is the third-largest technology start-up cluster in the world after San Francisco and New York.
In recent years, fintech has emerged as one of London’s fastest-growing sectors. In 2016 a report commissioned by the UK Government named London as the fintech capital of the world, and investment figures support this claim; 53% of all investment into Europe’s fintech market in 2015 was directed into London.
London provides 22% of the UK’s entire GDP and is home to almost a fifth of its private controller__item businesses
The city has three universities in the top ten of The Times’ world rankings of higher education institutions
Tech City is the third-largest technology start-up cluster in the world after San Francisco and New York
53% of all investment into Europe’s fintech market in 2015 was directed into London
Leeds has cemented itself as a major centre for British business over recent years. ONS data shows that 4,275 new businesses were created in the city in 2014, a number exceeded only by Birmingham.
Leeds is widely recognised as the country’s second financial centre behind London, but it has also developed a reputation in the tech, big data, digital and creative industries. The city has the highest concentration of digital, data and technology innovators in the UK, hosts a third of Britain’s internet, and has a creative controller__item worth over £3 billion per annum.
Leeds sits in the heart of the Northern Powerhouse, a government initiative to create a more powerful, prosperous and better-connected network of cities in the north of England. Its proximity to Sheffield, York, Manchester, Liverpool and Hull, among others, makes it an attractive location for start-up and scale-up businesses. Furthermore, Leeds has three universities, enabling businesses to benefit from an educated labour force, with 34.2% of the city’s 172,100-strong working age population having NVQ Level 4 qualifications and above.
Leeds’ booming technology-based industries are all set to expand at pace over the coming years. Furthermore, the city’s infrastructure is set to be improved courtesy of a £1 billion ‘Local Growth Deal’ with the Government, which will both create new jobs and accelerate economic growth.
4,275 new businesses were created in Leeds in 2014, second only to Birmingham
Leeds hosts a third of Britain’s internet and has a creative controller__item worth over £3 billion per annum
34.2% of Leeds’ 172,100-strong working age population have NVQ Level 4 qualifications and above
The city is to benefit from a £1 billion ‘Local Growth Deal’ with the Government
Edinburgh has the highest GDP per capita of any UK city, and the second best transport links behind London. The city has an internationally-renowned economy built on a diverse range of sectors, from construction through to financial services, and is widely praised for the strength of its business ecosystem. Today, Edinburgh is a particularly popular home for innovative science and tech companies.
The Financial Times named Edinburgh as the ‘Best Mid-Sized European City of the Future’ for 2014/15, while The European magazine declared that Edinburgh was the ‘Foreign Direct Investment City of the Year’ in the Business and Finance Awards 2015. Both awards recognise the city’s status as an attractive location for investing into or running a business.
The Scottish capital boasts three universities, which in turn have helped develop a highly-qualified local working population – 56.3% of the working age people in the city have NVQ Level 4 qualifications and above. Edinburgh also has a thriving technology incubator in the form of TechCube, which offers co-working space and support for the region’s brightest tech firms, and a further three science parks that provide state-of-the-art facilities for medical and scientific enterprises.
Amazon, Skyscanner and gaming firm Rockstar North have all set up home in Edinburgh, and many start-up and scale-up businesses are now emerging with the hope of emulating their successes. To help small businesses in the city, £2,500 loans are available to start-ups via Edinburgh’s local council. Furthermore, £5,000 of funding can be secured by businesses through the East of Scotland Investment Fund.
Edinburgh has the highest GDP per capita of any UK city
In 2015, Edinburgh was named the ‘Best Mid-Sized European City of the Future’ and ‘Foreign Direct Investment City of the Year’
The city has a tech incubator hub, three science parks and three universities
As the Welsh capital, Cardiff has a strong and well-established business ecosystem, which is populated largely by professional and financial services firms. With good transport links to London, the city has already become a popular home for start-ups and scale-ups, particularly tech, aerospace and biotech companies, which benefit from thriving business networks.
In 2014, Cardiff saw the emergence of 1,835 new start-ups, while its business survival rate stood at 40.4%. It has fast broadband speeds, with the average connection speed standing at 30.2 Mbps, and a large working population of 109,900.
One of the city’s great strengths for nurturing businesses is the pool of talent employers have to choose from. There are three universities in Cardiff, and almost half (46%) of the working-age population (equating to 50,140 people) in the city have NVQ Level 4 qualifications and above, meaning they have a certificate of higher education or university degree.
Cardiff also boasts two start-up accelerator hubs and two science parks to help provide support to growing businesses. In the future, this support infrastructure will be enhanced, as last year it was revealed that the City Deal – worth £1.2 billion – had been agreed to boost the economy of the Cardiff Capital Region. Furthermore, the Central Cardiff Enterprise Zone is also being developed to include a 140-acre new business district in the heart of the city centre.
50,140 people (or 46% of the working population) in Cardiff have NVQ Level 4 qualifications and above
The Welsh capital has two accelerator hubs and two science parks
Cardiff is going to receive a £1.2 billion investment to boost the Cardiff Capital Region and the Central Cardiff Enterprise Zone is also being developed
The city is particularly strong for tech, aerospace and biotech companies
Bristol’s economy has traditionally been closely linked with its ports and maritime trade, but in recent years it has become a symbol of Britain’s thriving entrepreneurship outside of the capital, with particularly strong tech, digital and creative industries populated by SMEs. In 2015, Oli Barrett MBE, serial entrepreneur and director of StartUp Britain, said that the South-West city was now the best place in the UK to start a business.
Connected to London by a 90-minute train, Bristol also benefits from having the fastest broadband of any UK city – with average connection speeds of 33.8 Mbps – as well as the presence of two universities, a science park and a start-up accelerator hub. Furthermore, the creation of the Bristol Temple Quarter Enterprise Zone in the city centre has helped to launch more than 350 new businesses since its inception in 2012, and to drive economic growth in the region. Bristol was also named the European Green Capital for 2015.
Several funding initiatives are set to improve Bristol’s business community even further. Last year, the West of England Local Enterprise Partnership (LEP) was awarded £86 million to create new organisations that will support business activity. In addition, Bristol Council has also announced plans to invest £400 million in improving the city’s infrastructure.
The Bristol Temple Quarter Enterprise Zone has facilitated the launch of over 350 new businesses since its launch in 2012
The city has two universities, a science park, an accelerator hub and the fastest average broadband speed of any UK city (33.8 Mbps)
Businesses in Bristol are likely to benefit from £86 million of investment through the West of England LEP and £400 million worth of improvements from Bristol Council
As the UK’s second largest city, Birmingham has long been a popular home for businesses. The city has traditionally been a vital hub for engineering and manufacturing, but its economy has now evolved into one that relies on a wider range of sectors, including the service industries, tech, and fashion and retail. At present there are around 34,000 businesses in Birmingham and in 2014 alone 5,300 new start-ups were launched in the city, which is more than anywhere else in the UK outside of London.
The city has four universities, one start-up accelerator and three science parks, with the Birmingham City Centre Enterprise Zone providing additional support for early stage businesses. Moreover, Silicon Tech Canal, otherwise known as TechBrum, is one of the country’s foremost tech clusters. Many other initiatives – such as the Moseley Exchange, Innovation Birmingham, Urban Workspace, Longbridge Technology Park and Birmingham Business Park – offer hot-desking or fixed office space facilities with mentorship for promising SMEs across a wide variety of sectors.
The Bullring in the city centre is one of Britain’s leading commercial centres. Coupled with the recently-opened Grand Central shopping mall, these outlets have become an incentive for an increasing number of retail and fashion firms – both new and established – that are choosing to set up offices in Birmingham.
Business funding to companies in the West Midlands is made available from Birmingham City Council, as well as two popular angel networks: Angels Den and Advantage Business Angels.
There are around 34,000 businesses in Birmingham – second only to London
The city has four universities, one start-up accelerator and three science parks
The Angels Den and Advantage Business Angels networks offer angel investment opportunities to start-ups and scale-ups
Race to Scale is:
A £100 million funding drive – designed to help your business scale up
An opportunity to secure between £100,000 and £5 million in essential development finance via IW Capital
A chance to pitch live in front of around 500 active angel and high-net-worth investors across four events hosted this year by our sister company, Crowdfinders
Open to established businesses ONLY, that are Companies House-registered, that can prove their concept/product works and that they have built a strong team of employees
In partnership with Seedrs, SyndicateRoom, UKBAA, Crowdcube, Smith & Williamson, Invesdor, IW Capital, Angels Den, EISA, Envestors, Growthdeck, Toucan, London Launch, ifour, Crowdstacker, Money&Co.