The potential boom in the SME sector

19th February 2020

The government has today released a report that forecasts the short and medium-term prospects of the UK economy which shows an expected GDP growth of 1.2% in 2020, and a further growth of 1.4% in 2021. This follows reports from the Guardian that the average UK wage has risen above pre-financial crisis levels for the first time since the recession in 2008, coupled with consumer confidence reaching the highest point since 2009. Several reports have also marked business confidence as being on the rise as businesses look to take advantage of increased political certainty.

The appointment of Rishi Sunak as the new Chancellor of the Exchequer and the upcoming Budget – on the 11th of March – has led many to speculate on the economic direction the UK will take in the coming years. Based on a paper written by Sunak – which called for the creation of a bond investment exchange for small businesses – the new chancellor could be a source of support for SMEs, unlocking their potential to grow and help the economy flourish.

With the Budget upcoming, new chancellor Rishi Sunak has the opportunity to capitalise on this optimism and encourage the growth of the SME arena, which accounts for 99.9% of private sector businesses and is therefore crucial to the success of the UK economy. Small businesses are often overlooked in terms of their economic contribution but they in fact make up over half of the UK’s private sector turnover. Over 16 million people are employed by SMEs, proving that they form the spine of the country’s economic landscape and will be a catalyst for progress if proper investment is made.

This news is very much in line with what we have seen from our investor base and the entrepreneurs that we work with. We have seen more demand than ever to invest into growing small businesses. The March budget will be an opportunity for the Government to address some of the issues that SMEs face and therefore unlock their growth potential, from late payments to access to funding. The ambition and talent of business leaders is clear, and the right support network will allow them to achieve their potential in the coming years.

Supporting and allowing this sector to grow will be critically important to the success of the wider economy in the next few years. By increasing the amount we invest in SMEs we could see a big boost to the UK economy as a whole – previous statistics have suggested that for every £1 invested £2 of GDP is produced by the companies that receive the finance.

IW Capital is keen to help SMEs across the country that need assistance to plan for the future and find the right kind of investment in order to help them reach the next level.