Expert Commentary on Leisure
Laying the foundations
Carolyn Fairbairn, Director General of the CBI
The book in your hands proves what many of us have long known: Britain’s Small and Medium-Sized Enterprises (SMEs) are unrivalled hubs of imagination and innovation. From fast-growing tech companies aspiring to be tomorrow’s ‘unicorns’ to Britain’s world-beating creative firms – today’s growing companies are in the market creating tomorrow’s growth and jobs.
In recent years, the CBI has been championing the work of medium-sized businesses (MSBs), in particular. While MSBs make up just 2% of firms, they are responsible for one in six jobs and generate nearly one quarter of private sector revenue.
Our recent Life in the fast lane report, produced in partnership with Experian and Lloyds Bank, showed that in the three years following 2010, MSBs tipped the balance from recession to recovery. Without their contribution, instead of growing by 2.7% over this period, our economy would have shrunk by 1.3%.
“To harness SMEs’ full potential, we need to go beyond the benefit our economy derives from them to consider what they need from us"
So – whether start-up or scale-up – SMEs are driving our economy. But to harness their full potential, we need to go beyond the benefit our economy derives from them to consider what they need from us. The London Stock Exchange Group’s ELITE Programme is an outstanding example of support available, providing services such as business support and mentoring to the top-tier of growing firms.
But difficulties in access to funding still make the journey from ‘small’ to ‘large’ a rough ride. Any CEO knows that long-term planning is essential to a successful business.
Yet CBI members have complained about difficulties in accessing the long-term capital required to back up these plans. More than half of MSBs responding to a recent CBI survey agreed that the lack of long-term finance is a barrier to growth. So, increasing the diversity of funding options for SMEs must remain a priority. Reducing the barriers to accessing equity finance and promoting the use of different types of debt will help improve the flow of finance to the businesses that need it most.
1 in 6 of all jobs are accounted for by medium-sized businesses
And we should not underplay the role of the financial services sector – itself responsible for 8% of GDP – in helping SMEs secure the funding they need to grow. We want to see the sector doing more of what it does best – providing growth capital, opening up trade finance and insurance and boosting infrastructure investment.
The right regulatory environment will be crucial to achieving this. In a global marketplace, the combined impact of post-crisis regulatory reform, taxation changes and the UK’s political environment will matter for all financial firms. It will be vital to ensure the UK remains an attractive place to invest. At the CBI, we believe the government must do all it can to protect the UK’s position – and reputation – as the top global financial centre.
So, from recognising the immense contribution of smaller companies to making sure they get the support and funding they need, let’s lay the foundations for the next generation of inspiring British businesses.