Earlier today, the Chancellor of the Exchequer Rishi Sunak delivered a speech outlining the UK Budget for 2020. A portion of the speech outlined the Government’s policy moves to mitigate the impact of the Coronavirus – an unexpected exogenous shock to the economy that could be profound. The budget included a £30 billion fiscal stimulus to support the economy during the crisis.
The Chancellor’s budget also highlighted Fintech and included a review that will seek to identify what more the government can do to buttress the UK’s leading position regarding innovative financial services.
Crowdfund Insider has received multiple comments addressing the budget from interested parties including Fintech industry participants. These comments are shared below.
Todd Latham, Chief Growth Officer, Currencycloud commented on the Government’s commitment to enhance coordination between regulators and ensure the UK continues to lead the way on Fintech:
“The Government’s commitment in today’s budget to ensuring the UK maintains its position as a world leader in financial services is great news. As a late-stage start-up looking to continue our growth, all support is welcome. As part of the Government’s efforts, we would like to see the UK and European regulators work more closely with their counterparts around the world to create a common set of standards for what is required for cross-border payments. Similarly, whilst the Open Banking initiative has been positive, we’d like to go even further and open up the Faster Payment system to Fintechs, as well as mandating access to banking infrastructure such as payment clearing schemes for Fintechs. We believe these initiatives will inject healthy competition and opportunities, ensuring long-term benefits for businesses and consumers that make cross-border payments.”
Paul Christensen, CEO at Previse, reacted to the lowering of Entrepreneurs’ Relief in the budget:
“While the lower threshold for entrepreneur’s relief is undoubtedly a welcome step in the right direction, the government needs to find new ways to incentivise start-ups and addressing the well-documented issue of slow payments is an obvious way to do so. It would also be a more sustainable method of encouraging entrepreneurship than tax relief. Businesses – particularly small ones – often fail because they have to cover their own expenses while waiting to be paid for the goods or services they provided. It doesn’t need to be this way. Technology today is such that suppliers can be paid instantly without disrupting buyers’ cash flow. Artificial intelligence can detect the small number of invoices that need a manual intervention using a history of invoice payment behaviour from buyers, so that the rest can be paid instantly.”
Niels Turfboer Managing Director of Fintech lender Spotcap, said it was great to hear the Chancellor focus on innovation:
“The UK Budget today was understandably mainly focussed on the current economic situation and the uncertainty around the coronavirus outbreak. That aside, it was great to hear that the Chancellor Rishi Sunak acknowledged the importance of innovation and technology for the UK to succeed in the global economy. In my opinion, this applies in particular to the UK’s thriving Fintech sector. The announcement of the Chancellor to increase public R&D investment to £22 billion per year by 2024-25 as well as increasing the rate of R&D tax credits is therefore great news.”
“We also welcome the funding announcements for UK businesses – including £130 million of new funding to extend start-up loans and £5 billion of new export loans for businesses. Too many companies still struggle to access the right finance to reach their full potential. The additional funding will hopefully support more businesses, helping them to grow and hire more staff. This will – ultimately – benefit the UK economy as a whole.”
RateSetter CEO Rhydian Lewis lauded the decision to review the UK Fintech ecosystem:
“The UK’s reputation for fintech innovation across investments, payments and banking is second to none and the fintech industry is delivering greater value, utility and financial inclusion to many millions of people.
“The fintech sector is maturing and becoming mainstream, and I warmly welcome the Chancellor’s timely announcement of a strategic review to ensure that the best fintech businesses can scale up to become major financial brands, both in the UK and internationally. I look forward to engaging with Ron Kalifa on the review.”
Frequent political commentator Nigel Green, Chief Executive and founder of deVere Group, called the Chancellor’s budget was one of substance when it came to shoring up the British economy in light of Coronavirus.
“He set out a raft of stimulus measures – that total £30 billion – that will help shield businesses from the worst effects of the outbreak- including that a fifth of the UK workforce could be out of work at any one time due to the virus. Whilst immediate gains are muted somewhat due to the short-term risks, markets will generally champion the economic support provided by the government. The steps set out by Mr Sunak combined with the Bank of England’s rate cut on Wednesday will help smooth investor jitters following a turbulent start to the week. Markets are looking for good reason to return to being bullish – which has been their default position for an unusually long time – and actions such as the UK’s coronavirus Budget could provide just that in days to come.”
Green expects global markets to recover by the end of the year.
Stephen Jones, Chief Executive of UK Finance, said they support the packages that support UK SMEs:
“SMEs are vital to the success of our economy and we support the package of assistance for businesses announced today by the chancellor. Through the Coronavirus Business Interruption Loan Scheme banks will be able to provide targeted funding, initially up to £1 billion, for impacted SMEs as part of the industry’s commitment to supporting viable business. This is alongside recent announcements from individual firms of the detailed support they are giving SMEs to help them continue to trade while they implement their contingency plans. We urge all businesses to think about how their customers, suppliers and cashflow could be affected by Covid-19 and to contact their finance providers as early as possible if they think they might have any additional financing requirements. The industry continues to work closely with government, regulators and business groups to ensure SMEs have the support they need and access to the best information and guidance.”
Matthew Allen, Partner and Head of Financial Services of the global law firm, Eversheds Sutherland, shared his opinion on the budget:
“The government’s vision of the UK being the best place in the world to grow and start a new business took a step closer today with the announcement of a major review of the UK Fintech sector in the Budget. Although the scope of that exercise has not yet been determined, the overarching aim is to identify what additional measures the industry and the Government can take to support growth and competitiveness.”
“The focus on regulating certain aspects of crypto-asset origination as well as the proposed discussion paper on central bank-backed digital currencies also constitutes a welcome and timely signal that technology and innovation are to be key pillars in the role the world-leading UK financial services industry will carve for itself in a post-Brexit world.”