4.5 Per Cent Unemployment a Good Sign, But UK Businesses Still Need Help

While the recent drop in the United Kingdom’s unemployment rate to 4.5 per cent is reflective of a strengthening economy, there are still vulnerabilities, financial industry representatives believe.

Conister director Douglas Grant said while the data suggests a strong and recovering UK workforce, attention needs to be given to business supply chains and the growing pressures participating companies see on a daily basis.

“Indeed the Confederation of British Industry (CBI) recently suggested that the UK’s economy had been plunged into a supply chain crisis, with major retailers’ stock levels at their the lowest since 1983 as a result of worker shortages and transport disruption caused by Covid, the Suez Canal blockage in March and Brexit,” Grant offered. “At Conister we currently have several instances involving significant advances across many sectors which are unable to proceed as a result of supply chain holdups and hence stalling any potential growth. Added to this we are seeing rising inflation and labour costs driving upwards, restricting any business growth.”

Grant predicted the demand from UK businesses for working capital is going to soar to unprecedented levels as more businesses desperately seek capital to address supply chain issues while also adjusting to post-EU life.

“We are already experiencing a debt burden for UK SMEs which has ballooned to record levels and unfortunately already created a relentless flow of weak zombie-like companies falling off a loan default cliff,” Grant observed. “It is imperative that we support sectors and businesses that are strong and nimble enough to adapt to the new economy and therefore continue contributing to its growth.

Grant said the introduction of the Recovery Loan Scheme (RLS) will provide additional support for business who show strong potential but who are struggling with gaining access to working capital. Conister is accredited to administer the initiative.“We have been pleased to see the government look beyond the obviously more resilient business sectors and introduce the RLS which can support those businesses that have been mostly negatively impacted by COVID-19, such as the hospitality and leisure sectors,” Grant said. “Conister will continue to do all it can, working alongside the government and traditional lenders, to support businesses.”

The economy is showing strength, but like Grant, Deepbridge Capital managing partner Ian Warwick said the need for targeted help remains.

“Today’s unemployment data shows the resilience of the UK economy as economic stimulus measures taper off,” Warwick said. “With economic stability and growth still at the forefront of the agenda it is therefore more important than ever that scale-up businesses, particularly in high-growth sectors such as digital technologies and life sciences are supported.

“They will be at the very heart of economic growth as we create an economy fit for the 21st century.”

Warwick credited the Enterprise Investment Scheme for being an important funding source at this crucial time.

“Government initiatives such as the Enterprise Investment Scheme (EIS) have never been more important for helping entrepreneurs and innovators source the funding they require, whilst also offering private investors with tax incentives to develop UK-supporting private equity portfolios,” Warwick said. “With our EIS funds reaching record levels of funding in 2020/21 it is evident that there is considerable demand from investors and financial advisers alike to invest in early-stage UK companies which we believe will be at the forefront of our economic recovery.”

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