A HEALTH check of the UK’s small to medium-sized enterprises (SMEs) has highlighted the threat Brexit can pose to their growth in Scotland, Wales, Northern Ireland and the less dynamic areas of England.
The UK Local Growth Dashboard 2018, from the Enterprise Research Centre, paints a stark picture of the nation’s varied growth geography among SMEs.
There are 5.7 million SMEs in the UK, accounting for more than 99% of businesses, which employ over 16m people and have a combined annual turnover of £1.9 trillion, 51% of all private sector output.
While Northern Ireland comes out top on many film-level growth measures, rural and coastal parts of Scotland, Wales and England show more sluggish activity. The number of start-ups in Scotland and those going on to achieve more than £1m of annual sales is also lower than the UK average.
“Our findings show a complex geography which challenges some of the preconceptions about the ‘hotspots’ of business growth across the UK,” said professor Mark Hart, deputy director of the ERC.
“There is evidence ... that firms in Northern Ireland have achieved impressive growth and productivity gains over recent years ... But a real concern is whether this can be maintained if Brexit results in more complex customs arrangements – which on the current path is almost certain – either between Northern Ireland and the Republic, or indeed between Northern Ireland and the rest of the UK and beyond.
“With the private sector in Northern Ireland traditionally rather fragile, this recently developing good news story could turn very sour indeed. Equally, many of the English regions as well as Wales and Scotland show weaker activity across the entire growth pipeline.
“The worry is that a macro-economic shock, as predicted by the government’s own analysis, could further damage business dynamism in these places.”
However, digital finance group PayPal UK said the growth in Scotland’s SMEs was not being helped by the constant cycle of local bank branch closures or poor digital connectivity in rural areas and said growth was being stunted by a lack of access to finance.
Nicola Longfield, the company’s director of small business, told The National: “It’s no surprise that in the same week we hear that Scotland has been the worst hit in the UK for bank branch closures, we also learn how Scottish small businesses are growing more slowly than their peers in many other parts of the UK.
“For Scottish businesses to grow, they need better access to finance.
“Unfortunately, small businesses are still struggling to convince traditional lenders to give them the funding they need. Fortunately, technology is helping us improve and open up financing solutions for small businesses.
“In recent years, we have seen an array of new services launch in the UK, such as PayPal Working Capital.”
She added: “These financing solutions are available online at any time, bridging the gap left by local bank branch closures.
“This service replaces the lengthy in-branch application process with a fast and flexible alternative, designed for the digital age. If accepted, businesses receive their funds in a matter of minutes.
“It’s obviously meeting a real need, as we have provided more than £625m to British businesses since the service launched in 2014.”
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