Britain could have much to learn from Germany. Photo: Jochen Zick-Pool/Getty Images
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A small question of confidence

Much needs to be done, especially when it comes to access to credit.

Flick through the business pages, and you will find countless news articles on the latest share price and quarterly results of the multimillion-pound FTSE-100 companies. It is easy to forget that these businesses account for a small minority of firms in the UK; Britain’s small and medium-sized enterprises (SMEs) are the backbone of our economy.

According to the Department for Business, Innovation and Skills, there were 4.9 million SMEs in the UK at the start of 2013, making up 99.9 per cent of the country’s private-sector businesses. Their combined revenue accounted for £1.6bn, or 48.1 per cent of total private-sector turnover, and they employ about 14.4 million people, corresponding to 59.3 per cent of the private-sector workforce. When SMEs grow, it’s the whole country that prospers, as usually they reinvest their profits, creating more jobs and boosting exports. So, is the government doing enough to support them?

There have been a few steps in the right direction. Business regulation has been reduced and simplified, and under the government’s Employment Allowance scheme, which will start in April this year, SMEs have been granted a £2,000 tax cut on their employer National Insurance contributions.

But still much needs to be done, especially when it comes to access to credit. “A third of our members are repeatedly saying in our quarterly surveys that they are having difficulties accessing adequate finance to grow their businesses,” says Mark Cherry, national policy chairman at the Federation of Small Businesses, the sector lobby group. This is especially worrying at a time when business optimism in the country has picked up – last month it reached its highest level in 22 years, according to research by the advisory firm BDO – because this shows that some of these small businesses will find themselves unable to grow even as the economic environment finally starts to improve.

Some government initiatives to increase lending to small businesses, including the Funding for Lending and Enterprise Finance Guarantee schemes, seem to be having only limited impact on the problem. Figures from the Bank of England show that net lending to businesses fell by £4.3bn in the three months to November 2013. The state-backed British Business Bank, which should become operational next year after it receives state aid approval from the EU, will also support lending to SMEs, but we’ll need to wait and see how big an effect it will have.

Increasing competition in the banking sector should be a priority, as SMEs at present are dependent on a small number of reluctant lenders. Equally important is that this support be sustained in the long term. “Short-term initiatives aren’t really taken up by small businesses because they have to adapt their plans to take advantage of some of these schemes,” Cherry says.

Other countries, notably Germany, Europe’s industrial powerhouse, have done a better job at strengthening their SME sector (what the Germans call their Mittelstand) by providing funding for firms that want to do research to help develop products. Through KfW – Germany’s business bank – the government also provides loans on favourable terms to SMEs that want to export to developing countries or invest in energy-saving programmes.

The British economy grew by 1.9 per cent in 2013, outperforming even Germany. Now just think what would happen if we championed our very own Mittelstand.

This article first appeared in the 13 February 2014 issue of the New Statesman, Can we talk about climate change now?

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Appreciate the full horror of Nigel Farage's pro-Trump speech

The former Ukip leader has appeared at a Donald Trump rally. It went exactly as you would expect.

It is with a heavy heart that I must announce Nigel Farage is at it again.

The on-again, off-again Ukip leader and current Member of the European Parliament has appeared at a Donald Trump rally to lend his support to the presidential candidate.

It was, predictably, distressing.

Farage started by telling his American audience why they, like he, should be positive.

"I come to you from the United Kingdom"

Okay, good start. Undeniably true.

"– with a message of hope –

Again, probably quite true.

Image: Clearly hopeful (Wikipedia Screenshot)

– and optimism.”

Ah.

Image: Nigel Farage in front of a poster showing immigrants who are definitely not European (Getty)

He continues: “If the little people, if the real people–”

Wait, what?

Why is Trump nodding sagely at this?

The little people?

Image: It's a plane with the name Trump on it (Wikimedia Commons)

THE LITTLE PEOPLE?

Image: It's the word Trump on the side of a skyscraper I can't cope with this (Pixel)

THE ONLY LITTLE PERSON CLOSE TO TRUMP IS RIDING A MASSIVE STUFFED LION

Image: I don't even know what to tell you. It's Trump and his wife and a child riding a stuffed lion. 

IN A PENTHOUSE

A PENTHOUSE WHICH LOOKS LIKE LIBERACE WAS LET LOOSE WITH THE GILT ON DAY FIVE OF A PARTICULARLY BAD BENDER

Image: So much gold. Just gold, everywhere.

HIS WIFE HAS SO MANY BAGS SHE HAS TO EMPLOY A BAG MAN TO CARRY THEM

Image: I did not even know there were so many styles of Louis Vuitton, and my dentists has a lot of old copies of Vogue.

Anyway. Back to Farage, who is telling the little people that they can win "against the forces of global corporatism".

 

Image: Aaaaarggghhhh (Wikipedia Screenshot)

Ugh. Okay. What next? Oh god, he's telling them they can have a Brexit moment.

“... you can beat Washington...”

“... if enough decent people...”

“...are prepared to stand up against the establishment”

Image: A screenshot from Donald Trump's Wikipedia page.

I think I need a lie down.

Watch the full clip here:

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland