As we start to see the emergence of green shoots in a post-pandemic environment, it is paramount that we equip our small and medium-sized enterprises (SMEs) with the resources they need to not only survive but thrive. SMEs are the bedrock of our economy, driving innovation, generating employment opportunities, and fostering local development.
As the SME lending landscape continues to evolve, it is crucial for the next UK government to prioritise and adapt their policies to support the growth and stability of these vital businesses. To ensure their sustained growth and resilience, Douglas Grant, Managing Director at Conister Bank has listed five key areas that the next UK government should look to focus on:
1. Establish long-term government-backed financial support
The temporary lifelines provided during the pandemic underscored the importance of accessible financing options for SMEs. Addressing issues such as loan repayment, interest rates, and financial regulations proactively is crucial. Rather than implementing short-lived schemes subject to annual revisions, the focus should shift towards establishing long-term, sector-specific financial support. This approach provides SMEs with the stability and predictability necessary for effective planning. By tailoring assistance to sectors still grappling with recovery disparities, resources can be allocated more effectively, avoiding the scattergun approach of past policies.
But what does this shift towards long-term, sector-focused support mean for SMEs practically? It translates into financial stability and flexibility, empowering SMEs to invest in innovation, expansion, and operational resilience. Beyond addressing immediate financial needs, such support lays the groundwork for sustained business growth.
2. Embrace technology as a job enabler
In an era of rapid technological advancement, there is a common fear that automation and digitalisation will lead to job losses. However, technology can be a powerful ally in supporting job creation and enhancing productivity. It is essential to leverage technology to support, rather than replace, jobs. The next government should invest in digital skills training programmes, digital infrastructure development, and technology adoption initiatives tailored specifically for SMEs. By empowering SMEs with the tools and knowledge to harness technology effectively, we can create a workforce that is adaptable, innovative, and resilient.
3. Enhancing and developing new infrastructure
Infrastructure projects are not just about concrete and steel; they are about creating jobs, stimulating local economies, and providing SMEs with the platform to grow. The next government must provide clarity and consistency in infrastructure and development funding promises, ensuring that resources are allocated efficiently, and projects are executed promptly. By fulfilling these commitments, we can unlock the potential for SMEs to succeed in vibrant, interconnected communities.
4. Optimising existing supply chains and infrastructure
The pandemic underscored the vulnerabilities of global supply chains, and in 2024, disruptions at vital trade routes such as the Panama and Suez Canals, coupled with escalating geopolitical tensions, have further exacerbated challenges in sourcing and distribution.
To safeguard against future disruptions and enhance efficiency, it is vital to conduct a comprehensive analysis of supply chains and infrastructure needs. By leveraging expertise and data-driven insights, we can identify bottlenecks, mitigate risks, and optimise supply chains to better serve the needs of SMEs. Furthermore, strategic investments in infrastructure, such as transportation networks and digital connectivity, will bolster connectivity and facilitate seamless business operations for SMEs across the country.
5. Incentivise investors to invest in UK SMEs
Access to capital is essential for SMEs to fuel growth and innovation. To attract investment into UK SMEs, the next government should introduce incentives for investors, such as tax breaks, investment schemes, and venture capital support. The support for the venture capital sector, facilitated by its VCT, EIS, and SEIS schemes, should be reinforced to establish a continuous financial support system for SMEs while simultaneously appealing to investors seeking tax-efficient investments and attractive returns. By creating a conducive investment environment, we can unlock capital, drive entrepreneurship, and catalyse economic growth across all sectors.
The success of SMEs is pivotal to the overall prosperity and resilience of the UK economy. By prioritising the outlined areas and implementing targeted policies and initiatives, the next UK government can create an environment where SMEs can thrive, innovate, and play a pivotal role in driving forward a much-needed economic resurgence.