A wave of job cuts primarily hitting young people has seen unemployment levels increase to a record 4.8% in the UK. Through the pandemic, the British government has tried to establish support for jobs by creating – and recently extending – a job-retention scheme. It has also provided support for small and medium enterprises (SMEs) by offering grants and loans and by postponing VAT payments to prevent companies from defaulting, delaying the inevitable surge of future unemployment.
SMEs are considered the bedrock of the UK economy. In 2019, SMEs comprised over 99% of all businesses. There are 5.9 million SMEs, and they employ over 15 million people, generating a turnover of around £2.2 trillion. Most businesses in the north of England are SMEs. Nevertheless, SME founders who operate in the northern region were facing huge financial challenges long before the pandemic occurred.
The evidence clearly shows that the centralised nature of the UK economy hinders future investment for high-growth firms in the north. Most private investors are heavily concentrated in the City of London and the south of England, specifically Oxford and Cambridge. Additionally, there is insufficient desire from high street banks to loan SMEs the investments that are needed for research and development as well as future growth, preferring to put their money into more secure, established businesses.
The City of London offers a template for the rapid growth of innovation-led enterprises. Most of the UK “unicorns”, privately owned startups that have amassed a worth of over US$1 billion (£760 million), such as Monzo, Ocado and Deliveroo, are located in London. This vibrant ecosystem is heavily supported by private and public sectors, as well as private investors and higher education institutions, in an environment rife with skilled and talented people.
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