In his recent speech, the Chancellor spoke of the Government’s target to halve inflation, unlocking entrepreneurial potential in the UK and the reasons for economic optimism. Ed Rimmer, Chief Executive Officer at Time Finance, shares his thoughts on the outlook for British businesses, and the role of alternative finance in boosting growth and productivity.
On Friday, the Chancellor gave businesses a real reason to sit up and listen. Rejecting the declinism that spread throughout 2022 and has followed us in 2023, Jeremy Hunt spoke of a need to be optimistic, and this is something I wholeheartedly agree with.
None of us are in any doubt that rising costs have posed challenges for businesses, but businesses have taken those challenges head-on, dealing with them with newfound agility and determination. That being said, the challenges of the last year aren’t behind us and simply talking about optimism isn’t enough. Businesses need to see action and a realistic strategy set in place. In his recent speech, the Chancellor laid out a plan which – if materialised – will enhance productivity, cultivate innovation and grow the economy.
The ambition is to become the most prosperous country in Europe, an admirable aim but it’s a long-term goal that will take considerable steps to achieve. Refreshingly the Chancellor did not gloss over the challenges that the UK needs to overcome in order to reach this target. Relating to businesses embracing new opportunities, he spoke openly about our weaknesses as a nation, our need to tackle poor infrastructure, poor productivity levels, skills gaps and low business investment. This is what businesses need to hear, mostly because it’s a realistic view of the issues impacting our economy but it’s also a blueprint argument for how to thrive as a business. We need to invest to move with the times, to innovate and grow. Optimism galvanises and without it, we will all stand still while the world around us moves on.
Optimism and Innovation
Probably the most significant of the Chancellor’s four pillars for growth is Enterprise. The UK is home to diverse industries, but we are falling behind other global players. So here the aim is to become an economic environment that is more ‘innovation friendly’ and ‘growth focussed’. We can be sure that taxes on businesses won’t be reduced any time soon, but there are other measures on the cards to help cultivate innovation.
The Government has protected its £20 billion research budget and has pledged to bring down inflation, but I do question if this is enough. Businesses looking to diversify, grow and do business internationally need effective forms of finance that they can channel into their own innovation strategies. If a business’ ambition is to break into a new market with a new product, new manufacturing equipment is needed. Government investment in research and development, and advanced manufacturing are undeniably key here. But equally vital are finance solutions that enable businesses to access new tech. We have a place in a delicately balanced ecosystem, and I’m really excited about the role we can play in unlocking our growth potential.
Optimism and financial stability
Creating the right economic conditions for risk-taking is a big part of the Chancellor’s strategy, and confidence is really important here. Businesses that have the right backing and can see a meaningful long-term strategy for the economy are more likely to take risks. If there is economic stability, businesses have a better backdrop against which they can work through their own uncertainty. But financial stability is only one piece of the puzzle; businesses need capital to achieve their growth ambitions.
As the Chancellor argued, Government grants galvanise, but they are not the answer. Traditional lending will improve by lowering inflation, but this solution is not available to all, it can be cumbersome and restrictive. This is where we step up. As businesses’ needs evolve, so too will their financial needs. As funders, we need to keep listening to the debates around economic growth, understand what businesses need from us and respond. The Government is talking seriously about creating growth, and we are here for businesses to make that happen for them.