Use of external finance falls by 7pc across the UK
The use of external finance has fallen by seven per cent across the UK, while nine out of the 12 regions have seen a drop in the use of small business finance.
According to the second annual Nations and Regions Tracker from the British Business Bank (BBB), 38 per cent of smaller businesses were using external finance in the second quarter of 2022, down from 45 per cent during the second quarter of 2021.
However, there was evidence that businesses outside of London are attracting more financing. While seed stage equity investments in London businesses fell by 22 per cent in 2021, investment in businesses outside of London rose by 88 per cent.
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The BBB said that data from the second quarter of 2022 suggested that despite global economic conditions, equity investment in the UK has held up in both number of deals and investment value in the first half of the year.
“We are seeing promising signs of growth in equity finance markets outside of London and data suggests equity investment in the UK held up in the first half of the year,” said Shanika Amarasekara, chief impact officer at the BBB.
Amarasekara added that businesses in net zero sectors has grown faster than in the overall UK equity markets.
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“For a sustainable and prosperous UK economy to continue to grow, businesses across the UK need to thrive,” she said.
“We want to break down particular barriers to finance so that access to finance is a level playing field for all entrepreneurs – wherever they are, whatever their gender, whatever their ethnicity.
“While businesses in highly deprived areas are more open to using finance, and report higher ambition levels, more must be done to reduce regional inequalities in access to finance.”
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