Quarter of SMEs blame lack of lending for UK’s ‘investment gap’
27 per cent of small- and medium-sized enterprises (SMEs) believe that challenges in securing lending have led to an investment gap in the UK, when compared to European companies.
According to a new survey by business lender Nucleus Commercial Finance, investment into UK SMEs is stagnating, despite recent government efforts.
Nucleus pointed out that the two-year super deduction – which allows SMEs to claim a 130 per cent capital allowance deduction on any major machinery purchases – has not led to a substantial increase in SME investing.
Just 13 per cent of UK-based SMEs said that they have invested more into their business due to the super deduction, while 16 per cent have actually decreased investments.
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This suggests that SMEs do not have the extra cash required to make key business purchases, and may benefit from considering alternative financing options instead.
The survey found that UK companies invest just 10 percent of GDP each year in the UK, compared with 14 per cent in rival countries, which has created an ‘investment gap’ between UK SMEs and European businesses.
58 per cent of the SMEs surveyed said that economic uncertainty in the UK was behind this investment gap, while 34 per cent blamed the high tax burden, 32 per cent said it was down to uncertainty in where to invest, and 30 per cent pointed to a lack of incentives from government.
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More than a quarter (27 per cent) said that access to finance was contributing to the investment gap.
Chirag Shah, founder and chief executive of Nucleus Commercial Finance, called on the UK government to “get behind business and stimulate innovation by thinking creatively”.
“Change in Number 10 offers a chance for a reset, a rethink, and a redoubling of efforts,” Shah added.
“UK SMEs are ambitious and hungry to grow, but it’s incredibly frustrating for them that too often the odds are seemingly stacked against them.
“It is imperative that the shake-up in Downing Street results in a more impactful business strategy from the government.
“With its support, finance providers can then help businesses seize upon the growth opportunities and power the UK forward.”
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