As coronavirus causes financial uncertainty, supporting SMEs is more crucial than ever
The Government has announced this morning they are due to unveil new financial measures to support the UK economy as the coronavirus continues to impact the global stock market. Since COVID-19 has been declared a global pandemic, the world’s economy has been in a state of flux. The FTSE 100 has seen several days of gains and losses of over 5% – significant swings in what is the UK’s biggest stock index. While SMEs are not part of this index, the uncertainty around the coronavirus pandemic has meant many investors may be considering their options.
The recent support announced by Rishi Sunak in his inaugural Budget for SMEs has been welcomed, however much of the support for small firms will come from private investors. SMEs already contribute 52% of the turnover in the UK’s private sector, and expanding investment across the whole of the nation will unlock the growth of the economy exponentially.
Luke Davis, CEO of IW Capital- a private investment house that specialises in backing SMEs – discusses the importance of supporting SMEs during this time:
“As FTSE stock changes markedly each day, it is important to remember that these effects are temporary. A variety of events can cause shocks to economic cycles; the stock market is volatile by nature.
Financial ventures such as investments, especially in the SME arena, are lengthy commitments, usually lasting five or seven years, and as such will inherently live through fluctuations in the economy. Over the course of the investment, these shocks – such as the coronavirus – diminish in importance over the overall lifetime of the investment, levelled out by periods of financial strength.
It is crucial that now, even in the uncertainty, that investors do not stop supporting SMEs and continue to bolster the arena to safeguard the nation’s economy for the future. We have seen extensive support for SMEs in the budget but private investors will be key to helping these firms to survive and thrive.
After the financial crash of 2008, it was entrepreneurial spirit and ambition that turned things around to make the UK one of the world’s fintech centres; if we take opportunities and support away from those starting a business we could miss out on vital growth and innovation in the long-run.”