Stock markets have retreated this morning following fears of a second wave of Covid-19 infections as the Bank of England is expected to expand its bond-buying programme by £100bn-£150bn. The Bank is expected to announce its policy decisions at noon after its monthly meeting. As well as the £100bn expansion to bond-buying asset purchase programme, the benchmark interest rate is likely to stay unchanged at 0.1%, a historical low. This comes as the markets opened lower than expected this morning with the UK’s FTSE 100 down 0.59%.
While support for the stock market and large businesses are important for the UK economy, the SME sector is crucial to the post-Covid recovery. SMEs make up 99.9% of private sector businesses and currently employments over 16 million people, so supporting entrepreneurs to start businesses as well as providing vital growth finance is clearly of the utmost importance to the overall health of the UK economy.
Luke Davis, CEO of IW Capital and private equity expert, discusses the importance of continued support for the SME market to help the economy recover:
"While the markets are often used as an indication of the overall health of a nation's economy, it doesn't recognise the strength and resilience of the backbone of the country; UK SMEs. With an economic contribution of over £2trillion, the success of the UK economy as a whole may in future hinge on the prosperity of SMEs, start-ups and high-growth firms.
There is a fantastic range of innovative, growing SMEs that we work with which are likely to drive our private sector forward in the coming years and employ some of the finest talents in the market today. Stimulus packages from both the Bank of England and the Government must recognise the vast proportion that the SME economy occupies and offer adequate support to help drive the UK out of a Covid-19 recession if the worse may happen. With innovation in and around the crisis coming from many UK-based SMEs by helping the NHS with PPE, making sure sectors can reopen and getting Brits back to work, stimulus packages must be used to help benefit entirety of the economy."