Why investor support to businesses will be key in the UK’s economic recovery 

4th March 2021

The Chancellor’s Budget will be welcomed by many, especially among business owners. The increase in spending is a strong step in the right direction and is something that is sure to attract investment into businesses, playing a huge role in the nation’s recovery post-pandemic.

It was great to see such a business-focused budget, in a time where so many are in need of further support. The introduction of the new Restart Grant will be great for the sectors hardest hit during the pandemic and will be sure to provide a boost to the hospitality sector, as businesses look to reopen their doors again next month.

The announcement of an additional £5bn grant to retail, hospitality and leisure is another strong form of support from the Government that will provide much needed respite to struggling businesses.

We also saw the Chancellor’s confirm his £520m Help To Grow scheme, which was something many were waiting to hear. This will give 130,00 SMEs access to some of the UK’s top business schools, while encouraging companies to adopt technology, in the hope of opening opportunities to small businesses that usually only larger companies can afford.

Although we have seen a numerous support schemes laid out for businesses, what we were hoping to see, at IW Capital, was an extension to the Enterprise Investment Scheme to help encourage SME investment from private sources. Increasing income tax relief from 30 to 40% for EIS could provide a 10x return on investment and would increase the appetite to invest in growth sectors, which furthermore would create jobs, boost recovery and enable future growth.

Previously through the scheme, over £22billion has been raised for small firms in the UK from private sources, providing over 31,000 companies with vital growth finance. When the scheme was extended in 2011 – increasing income tax relief from 20 to 30% – the amount invested increased by 87%, providing an extra £472m of finance. A similar jump would provide £1.5 billion of extra investment at an extra cost of £150 million to the treasury.

What we really need to see is more practical support offered to businesses, too many have been overlooked and we are now seeing the shortcomings of the Government’s Covid relief strategy. Having worked with and invested in the hospitality venue, Rockwater Hove, we have been able to see how much people want, more than ever, a place to come together as a community which makes us feel confident that with the rollout of the vaccine and the chancellor’s Budget now in place, pubs, bars and restaurants will bounce back but they will need real support and investment to help the sector grow.

Private capital has proven to be fundamental in helping UK businesses weather the storm and recover and grow post-pandemic. Investment into UK SMEs, and the extension of EIS and loan support schemes, would be far more efficient than any Government loan scheme and vital to the resurgence of the UK economy, with the SME community making up 99.9% of private sector businesses.

To find out how IW Capital could maximise your investment opportunities, please contact the team today on 020 7015 2250, or email info@iwcapital.co.uk.