Business growth from all corners of the economy
Commentary by Henrietta Jowitt, Deputy-General, CBI
With an incredibly busy start to the year for businesses, we were pleased to see the Government keeping firms’ needs front of mind through the Patient Capital Review. It is critical that UK businesses receive the right advice, tools and access to finance so that they can grow and innovate.
Now is the time to foster a true, long-term investment culture in the UK. Only 36% of SMEs use external finance and, while scaling up is not appropriate for all such businesses, we believe that both Government and the financial services sector have work to do in making them aware of their financing options for growth. In particular, we are aware that equity funding is relatively under-utilised.
Patient Capital is key to this ambition and the Government should continue to build on the British Business Bank’s existing successes. Current public and private initiatives are far from reaching their full potential and, given the potential gap left by the withdrawal of the European Investment Fund, which is specifically set up to fulfil the needs of SMEs, the British Business Bank could increase its scope to make up that shortfall in support.
We would like to see better awareness that business growth can come from anywhere in the economy, not just those sectors that are perceived to offer high-growth potential. We want to see a welcoming attitude to all types of firms, as the concept and application of patient capital are refined, regardless of perceived levels of innovation.
The final part is, of course, the source of investment capital. Short-term public investment, via the British Business Bank, could, for example, act as a signal to private investors. This should be managed carefully, to ensure that private money isn’t crowded out. The CBI is also confident that global pension funds can have a central role to play in the provision of patient investment in the future.