Business Bank no panacea says Centre for SMEs
A LEADING expert on the UK’s small and medium-sized companies has warned that finance alone is not enough if the UK’s growing firms are to match the success of Germany’s Mittelstand.
Professor Stephen Roper, director of the Centre for SMEs at Warwick Business School, welcomed Vince Cable’s £2bn British Business Bank, but suggests it won’t do much to get the economy moving in the short term.
Professor Roper is the co-author of a wide-ranging report sponsored by GE Capital called ‘Leading from the Middle: The Untold Story of British Business,’ in which he compared UK mid-market businesses to Germany’s Mittelstand, the medium-sized companies that help to drive that country’s economy forward.
He argues the proposed Business Bank is a welcome step closer to the kind of Government backing necessary for UK businesses, but suggests this is a long- term project and the money needs to be backed with expert advice.
“The proposed business bank is very welcome and should make a significant difference to UK SMEs in the longer-term,” said Professor Roper, who is also professor of enterprise at Warwick Business School.
“But it won’t do much to kick-start the economy in the short-term. This is a long-term solution and I think it will be two years or more before any new funding gets to companies.
“Implementing this proposal will be crucial to its success. The Government is proposing to use challenger banks to reach SMEs and these banks will need to develop new capacity to deal with this type of business-facing activity. So, I don’t think we will see any impact from the Business Bank in this parliament.”
And Professor Roper argues mid-market businesses should also be included in the coverage of the bank.
He said: “Our recent research suggests some of the strengths of the UK mid-market. These 21,000 companies had increased their employment in recent years while larger firms had lost around 700,000 jobs during the recession.
“A business bank which helped these UK firms to match the growth of their German counterparts could generate an additional 240,000 additional jobs over five years.”
