What will the Pfizer vaccine mean for UK SMEs?

Pharmaceutical giant Pfizer and German manufacturer BioNTech have developed a Covid-19 vaccine, marking the breakthrough as a "great day for science and humanity." Interim analysis suggests that the vaccine is more than 90 per cent effective in preventing Covid-19. Although studies will continue to go on, the vaccine has already been tested on 43,500 people in six countries, with no safety concerns being raised thus far.

Despite Boris Johnson's warning that people should not "rely on this news as a solution" to the pandemic, this important scientific breakthrough will be welcome news for much of the population, particularly small business owners. SMEs have been hugely affected by the pandemic over the past few months, and have had to remain resilient through rigorous lockdown restrictions, which have forced many firms to temporarily close their doors twice.

Research by Paragon Bank revealed that the UK's SMEs have shown resilience, agility and innovation as they entered the second coronavirus lockdown, with 49% believing that the learnings from the pandemic will help their business become more resilient in the future.

Whilst the pandemic is far from over, this news will provide hope to the UK's SMEs that the end is in sight. In response to Pfizer's vaccine results, the FTSE 100 rocketed, with the blue-chip index climbing 5.53 per cent to 6,236.93, and the midcap FTSE 250 climbing 5.43 per cent to 18,890.32. This suggests that investor sentiments have surged, sending markets to strongly positive levels.

Luke Davis, CEO and Founder of SME investment house IW Capital, discusses the impact of the vaccine trials on the country's small businesses, and how we can help them to survive and thrive in the meantime:

“This has been an incredibly difficult time for SMEs across the country - while small firms have always been the most adaptable and nimble companies in terms of changing their offerings to adapt to market demand, the past few months have really taken their toll on many of the country's smaller businesses. Therefore, the news of a vaccine rolling out early next year may signal a 'light at the end of the tunnel' for many small business owners. 

There are fantastic businesses across the country with a huge amount of growth potential, and we must ensure that they don't slip under the net before a vaccine becomes readily available, and the country returns to some semblance of normality. Schemes such as the Enterprise Investment Scheme will be more important than ever, by offering investors a tax-efficient way to back small growth businesses, reducing risk and increasing the potential for returns on investment.

Making growth investment more easily available to these SMEs 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.

Following our investment into Transcend Packaging - a firm who have shifted to PPE production - they have nearly doubled their workforce. This demonstrates the value of extending the scope of SME investment schemes such as the Enterprise Investment Scheme.

Investment in the small business community will be key to encouraging economic growth, with the SME arena contributing over £2tn, employing around half of the private sector workforce, and accounting for 99% of all businesses. The success of the UK economy as a whole may hinge on the prosperity of SMEs, start-ups and high-growth firms."

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