Opinion

Without more support for SMEs, the recovery is in danger of stalling

5 min read

14 October 2013

Phil Orford, chief exec of the Forum of Private Business, says small businesses need help to reach out to the world.

In economic terms, 2013 will be remembered as the year the UK turned a corner. After years of gloom, a sustained recovery has started to look increasingly likely, with the summer months having brought welcome news on the state of UK manufacturing, as well as falling unemployment and rising UK exports.

The latest good news comes from across the Pond, with the Washington-based International Monetary Fund raising its growth forecast for the UK. National output is now expected to expand by 1.4 per cent this year and a further 1.9 per cent in 2014.

The development has been widely interpreted as further evidence that Britain’s recovery is gathering pace and comes just months after the fund dismissed the long-term prospects of the Government’s austerity plans.

“In the UK, recent data has shown welcome signs of an improving economy, consistent with increasing consumer and business confidence, but output remains well below its pre-crisis-peak”, the fund said.

The Government’s own figures are expected to show that the economy grew by one per cent in the third quarter, following an expansion of 0.7 per cent in the three months to June.

But immediately after this announcement came the disappointing news that output from British factories fell unexpectedly in August, sending overall industrial production down 1.1 per cent in its biggest monthly fall for almost a year.

The figures serve as something of a reminder that, for all the optimism surrounding the IMF announcement, the UK remains in a precarious position, with greater efforts needed to cement recovery.

It’s well established that small and medium sized businesses are playing a central role in driving economic growth, but their ambition to grow needs to be fed.

British businesses must make sure that enough time is spent targeting untapped opportunities, especially the expanding markets that will only grow in the coming years.

Events such as the forthcoming International Festival for Business aim to do just that, connecting British companies to new markets, new products and new partners by bringing politicians and business leaders from around the world to Liverpool next year.

The biggest global business event of 2014, next year’s 50-day long festival will bring in £100m worth of direct inward investment to the UK. Bringing together representations from over 125 countries, it’s a statement of what the UK, its cities and its businesses can do.

It is a central part of the Government’s plan to drive investment in the UK, promote economic growth and double UK exports by 2020.

The latest SME Finance Monitor survey has shown that 51 per cent of SMEs expect to grow over the next 12 months, up from 48 per cent in the previous quarter – this is the highest number of businesses forecasting growth since the survey began.

Without further support for Britain’s SMEs, however, the recovery is in danger of stalling before it has been given a chance to take hold. The real challenge will be in maintaining momentum, ensuring that the companies with ambition are not frustrated in their attempts to reach out to international markets.

As it currently stands, not enough SMEs are considering international trade a viable option, with many put off by the financial risks involved and a lack of access to meaningful partnerships.

To counter this reluctance it’s crucial the Government does all it can to promote British industry and showcase what the UK has to offer. We have a proud business tradition and an excellent array of industries to offer the world – this needs to be shouted from the rooftops.

UK businesses have to reach out to the world, but they need our support. The time has come for their ambition to be rewarded.

Phil Orford is the chief executive of the Forum of Private Business and an ambassador for the International Festival for Business 2014.