Unemployment across the nations has surged to its highest levels recorded in over four years, as the second wave of the Covid pandemic and third national lockdown restrictions place more pressure on business across the nation. In the three months to November 2020, there were around 200,000 job losses, with the unemployment rate now sitting at an alarming 5%, bringing the total number of unemployed to 1.7m. Investment into SMEs has never been more important, and with these businesses making up 99% of all UK business, could such investment be the answer to tackling this unemployment surge?
SMEs throughout the UK employ around 16million people, highlighting the importance of private capital and investment in these businesses in order to enable growth and furthermore employment as a means to assist in bringing the UK economy back to where it was pre-pandemic. Figures from the ONS show that SMEs have created jobs at a rate which is three times higher than that of large businesses over the past five years – adding 1.7million jobs compared to around 650,000. This likely stems from the increased capacity to grow from start-up level right through to unicorn status as some firms do.
Despite the current climate, there are a huge number of SMEs that have adapted quickly to the pandemic and the changes it has ushered in, along with a 12% increase in new businesses starting up during 2020. These new businesses are now looking for investment to enable recovery and future growth post-pandemic, and with this, these new small businesses will be able to provide jobs for the millions left unemployed and tackle the regional funding gap.
44% of investors are now looking to back UK-based companies instead of global firms
57% of investors believe that post covid, major UK cities outside of London are rising in importance as business hubs
58% of investors feel that low interest rates mean they are now looking for alternative ways to invest their money
Luke Davis, CEO of IW Capital:
“Investment into SMEs is proving to be more important than ever to help tackle the vast unemployment rates that we face, as SMEs account for the employment of 16million people here in the UK and with investment, these businesses are primed to grow and therefore create jobs. Local small businesses play an integral part in our economy and require additional investment and support to help them during these tough times.
“Investors need to start looking outside of London, where there are a number of great investment opportunities. Here at IW, we are doing just that with Rockwater in Hove where we have raised a significant amount of investment from the local community. Hospitality is an industry that has felt the true impacts of the pandemic and the restrictions that it has ushered in, but this is too a sector that is sure to see a boom when the lockdown eases as a result of pent up demand. Now is the time to invest in businesses to enable recovery and create new jobs as a way to tackle rising unemployment the nation is facing.
“Making growth investment more easily available to small businesses that are looking to grow should be a priority. The last time that the Government-backed EIS was extended, it resulted in a significant jump in private investment into small businesses. Replicating this effect with new, or increased, incentives would provide a much needed boost to a section of the economy that is most in need, and so we hope this will be addressed in the near future.”