Luke Davis: Government must look beyond Brexit for SMEs

With the general election fast approaching, the UK's major political parties have ramped up their campaigns as they compete for the opportunity to lead Britain through one of the most significant political and economic transformations in modern history.

IW Capital chief Luke Davis says the next government must implement a long-term strategy to champion SMEs. Picture: Scott Louden

Cutting through the campaign rhetoric of the Conservatives and Labour, both the major political parties have structured their respective campaigns around the broader implications of Brexit.

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However, when it comes to some of the structural challenges facing British businesses,the country’s small and ­medium-sized enterprises (SMEs) have been largely overlooked.

There’s no denying the vital role SMEs play in fuelling productivity and catalysing private-sector growth – at the start of 2016 there were 5.5 million private-sector companies operating in the UK, with 99 per cent of those small businesses.

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Britain is renowned for a business ecosystem that fosters innovation, promotes entrepreneurship and encourages start-up creation across a diverse range of sectors. One of the country’s standout sectors is the expanding tech industry, and in March, it was revealed that the UK’s digital economy now contributes £97 billion to the economy.

Despite this, British businesses are being hindered, limited in their ability to achieve long-term scalability. While the OECD may rank us third in the world when it comes to company-creation, we rank 13th for the number of start-ups that become scale-ups.

Theresa May’s government has previously recognised this issue, with welcome steps in the right direction, and recent IW Capital research found that 6.62 million UK investors believe entrepreneurs will continue to play a critical role in driving private-sector growth. However, long-term vision is required to ensure that targeted investment can be made across the country to nurture the long-term growth potential of UK SMEs.

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As political parties hit the road for their election campaigns, it is of utmost importance that SMEs – and in particular scaling businesses that have a vital role to play in the country’s economic future – receive the support and recognition they require.

The next government must look beyond Brexit and implement a long-term strategy to improve SME scalability and champion our thriving private sector.

• Luke Davis is chief executive of IW Capital

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