Development Economics has recently undertaken a study on behalf of Santander that examines and quantifies the contribution that Small and Medium sized enterprises (SMEs) make to the UK economy.
SMEs make up the vast majority of businesses in the UK, and they are vitally important as generators of wealth and jobs. They are also important sources of innovation and productivity growth for the economy as a whole, especially in fast-moving, knowledge-intensive sectors such as digital industries and professional services.
The full potential of SMEs to contribute to the UK economy is currently held back by several factors, including access to finance. Although at first glance access to supplies of credit appears to be less of an issue now compared say to 5 or 7 years ago, there is increasing evidence that the appetite for credit among some SMEs with growth ambitions remains constrained. This could be a lingering result of the restricted credit supply situation of 2009-2012 which may still be affecting the attitudes of some entrepreneurs to borrowing, or the confidence and trust that SMEs have with their banks and other potential sources of credit.
The new report examines in detail the constraints on SME growth and development and explores how changes on the supply side of the market for business credit as a result of enhanced competition in the market could affect the potential future growth trajectory of UK SMEs, and the ability of these businesses to create new jobs and to generate wealth.
As well as impacts on the UK as a whole, the report also quantifies the current and potential future contributions of SMEs to each of the UK’s countries and regions. It also considers the effects on each of 18 business sectors that together the entirety of the economy.