Wednesday 7th Aug 2019
British Business Bank steps in to support UK start-ups
The British Business Bank, a government-led development bank that focuses on small to medium sized enterprises looks to be increasing investment to help bridge some of the funding gap that is likely to appear when the UK leaves the EU. In 2018-2019 it increased funding by more than 25% for a total of £6.6bn in the year, and it hopes to have a similar positive impact in the coming months.
Brexit is widely believed to be a challenge to businesses of all sizes, with a range of significant effects. While larger and more established businesses will be looking to see how their existing supply chains and other operational concerns can adapt to succeed in a new regime, entrepreneurs and smaller businesses may feel that they’ll struggle to get off the ground at all. This is partly down to market uncertainties that make business planning difficult, and partly down to the fact that investment isn’t necessarily as widely available as some entrepreneurs may hope. Companies will need to use all the resources at their disposal to ensure some semblance of stability should Brexit make things turbulent.
The direct issue is that the EU Regional Development fund will no longer be available as a source of investment for UK SMEs, and The British Business Bank will bear some of the responsibility
The EU Regional Development Fund is an initiative that seeks to help move funds from wealthier areas of the union into those that are seen to need investment. Rather than focussing on countries, it instead breaks things down into regions in order to tackle inequality. Here in the UK, the Regional Development Fund was a significant benefit to British businesses located in places like the North, the Midlands and Wales. These areas have traditionally been less attractive for business investment when compared with London and the surrounding areas.
New UK Prime Minister Boris Johnson has made noises about increasing investment in the months and years following Brexit, whether a deal is reached or not, and it’s likely that some of this investment will be directed towards startup businesses. However, no concrete details have been announced, and the uncertainty over Britain’s mode of exit from the EU means that information is not forthcoming.
Former Chancellor Phillip Hammond gave the British Business Bank £200m in his last budget to spend on SMEs, but it remains to be seen whether or not newcomer Sajid Javid will have the same kind of impact. The Bank’s chief executive has said that he will be speaking to the Government about increasing funding, which would be good news for smaller businesses in the current uncertain climate.
Source: Financial Times