The latest economic figures churned out by some UK business bodies don’t make pretty reading. UK GDP shrinking by 0.4% in 2012 and growth set to slide from 1.9% to 1.2% in 2013, according to The British Chambers of Commerce. The Confederation of British Industry are similarly downbeat, suggesting that the economy is set to contract by 0.3% in 2012. If you believe those stats, the immediate future doesn’t look too bright.
A side effect of the bleak economic outlook is that banks don’t appear to be keen on lending, despite insisting that they are. Mix those dire growth statistics with cautious banks and you’re left with an altogether grim looking economic cocktail.
To counter the current economic woes facing UK freelancers, contractors and small businesses, George Osborne last week proposed the idea of a ‘Small Business Bank’. The concept behind the scheme is to address the ‘weaknesses in our banking system’ and help small businesses, in his words, the ‘innocent victims of the financial crisis’.
It could be argued it’s been a long time coming. One recent study suggested that as few as one in ten small businesses succeeded in gaining the amount of investment they applied for in the past year, with one in three suggesting that they failed to secure any sort of funding via banks. They’ve not been too forthcoming by the looks of things and finally, it appears, the coalition has decided to act.
Quite what the Small Business Bank will entail remains to be seen. The idea has yet to take shape, although broadly speaking it seems to be a way to house the Government’s various SME lending schemes. Osborne has provided a brief overview of what he intends the bank’s modus operandi to be though, suggesting that the bank will have a strong private sector focus, take responsibility for government backed programmes such as the Business Finance Partnership and will operate as a separate entity to the high street banks, rather than in competition with them.
The consensus amongst business leaders so far appears to have been positive, their general attitude being one of ‘less talking more doing please’. Whether Osbourne’s words bear financial fruit for the small business community will be seen in time, but the potential for an easing of access to capital has got to be a rare piece of good news amongst a wealth of bad news for small businesses.