Douglas Grant, Group CEO of Manx Financial Group PLC, Comments on the outlook for SMEs as GDP grows by just 0.1%.
He said:“Latest GDP figures for Q4 show that UK economic progress remains stagnant, generating just 0.1% of growth with the country expected to enter a recession later in 2023. With rising interest rates and high inflation, SMEs must take this announcement as a reminder to review their existing lending structures and ensure they are prepared for further adversity.
“Many SMEs prepared for the rate hikes announced last week by listening to lenders and locking in their debt into fixed rate structures, but it is now too late for other businesses that were not as forward-thinking. As businesses desperately require liquidity provisions to counteract supply chain issues, increases in wages and a worsening cost-of-living crisis, demand for working capital will continue to rise. Our research reveals that over a fifth of UK SMEs that required external finance over the last two years were unable to access it. Moreover, over a quarter of SMEs have had to stop or pause an area of their business due to a lack of finance. The lack of availability of finance is costing SMEs and the UK economy in terms of growth at a time when it is needed the most. The level of growth that is being prevented is significant and will require novel solutions to bridge this funding gap.
“Despite positive introductions and extensions to loan schemes last year, such as RLS Phase 3, more proactive action that what we saw in the Spring Budget is needed. Since the pandemic-caused economic turmoil, we have been calling for a sector-focused permanent government-backed loan scheme that brings together both traditional and alternative lenders to guarantee the future of our SMEs. As the government looks for ways to power the economy’s resurgence, the importance of a permanent scheme cannot be understated. It could act as the fundamental difference between make or break for many companies and, in turn, our economy. We hope this becomes a reality.”