There are many millstones hanging around the neck of Britain’s economy in early 2019.
The fall-out from Brexit is one, notably the instability of the value of the pound and uncertainties over future trade agreements and employment rights.
But there is another blot on the landscape that has got everyone exercised: the UK’s lagging productivity when it comes to small, independent businesses. This is not a new concern.
There is no doubt that productivity is a critical issue for the UK economy and if further stagnation is to be avoided, raising small business output needs to be a key focus. Small businesses are the engines of economic growth and prosperity, fuelling local economies right across Britain. In 2018, the nation’s 5.6 million small businesses had a combined annual turnover of £2 trillion — that’s 52% of all private sector turnover in the UK.
Since joining TSB last year, my ambition has been to help more small businesses and their local communities to thrive — and it’s by doing this that I believe we can play a significant part in tackling this problem and making a difference to the wider UK economy. I have worked closely with SMEs for most of my career and I have always been inspired by their capacity to ride the economic waves, create jobs and serve local communities.
However, in the aftermath of the financial crisis, small business confidence is low and in recent years their productivity has been flatlining. In an increasingly digital economy, SMEs are losing out because they aren’t being given the right access to the support and services they need to start, run and grow their businesses. Our own research shows that giving small businesses access to the products, tools and advice they need could deliver a 10% increase in their productivity and boost UK GDP by up to £70bn.
We feel that the confidence of small business owners in their ability to raise finance to grow their business is low, and many businesses no longer talk to their bank. In this environment, it is even more important than ever that all small businesses are provided with what they need to thrive.
TSB believes banks must play a key role in this — both in improving business banking services, and also collaborating with a range of partners to help provide local access to the advice, technology and services that small businesses need. This all needs to be underpinned with a greater focus on helping small businesses to borrow well and providing small businesses with the protection they need should they get into financial distress.
With TSB’s ambition of bringing new services to this sector to help reinvigorate local communities, we want to play our part in unlocking this productivity potential for small businesses right across the country.
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