A restoration within the UK is feasible with deliberate company investments
With the situation in the UK getting worse and worse, it feels kind of counter-intuitive to direct our thoughts on how the country is going to turn into a recovery. However, as the fantastic work of our scientists and the increased adoption of vaccinations by the government bring new hope, that is exactly what we must plan for. The sheer will and fighting spirit of the British people will at some point turn the tide for our beleaguered businesses. Hope and optimism are praiseworthy qualities, but where and when do the seeds of recovery begin to reveal themselves?
For months there has been a litany of bad news with not only unemployment rising but reports of many companies hanging on their fingertips surviving only due to vital infusions of enormous financial support from the UK government. We all know that this is impossible at these stratospheric levels, and while there are few alternatives in the short term, forecasting the medium and long term requires different considerations if our recovery is to be sustained.
If we accept that government handouts must end soon, they must be replaced with a very serious investment program – a platform that creates real entrepreneurship, creates new jobs, productivity is booming, and sustainable growth. The repayment of the enormous debts that arose from the fight against Covid-19 cannot come about by asking already weakened companies to take on the further burden of higher taxes. It only ends in one direction in terms of unemployment. Instead, the UK needs to recover and grow by becoming a world leader in investment.
Investing in infrastructure and connectivity in the regions has been talked about for ages, but it needs to be done on a large scale now. In due course, it must support and support thriving private companies. Give our entrepreneurs the environment to thrive. Encourage them, make it easier for them, lower taxes rather than raise them. It is not about servicing the nation’s debts in a short period of time. It’s about building long-term growth. Lending rates are lower than ever and now is the time to capitalize on it. A vibrant, growing economy will make it much easier to deal with our debt in the long run anyway. Brexit also gives us the opportunity to gain access to broader global markets, increase our exports and improve our balance of payments. It feels like the time is here for us.
The UK regions are desperate for the government to stick to its leveling commitment. Many great companies are ready to take this opportunity to get their necks covered. Sooner than later, financial support measures have to give way to concrete investments in order to divorce companies and their employees from loans and grants. Our people have to work and produce again to pay off their Covid-19 debts. That responsibility is not just with the government, it needs to create the platform for private investment to fuel the recovery.
Tax-privileged investing will play a clear role in encouraging the private sector to support its own growth. VCT and EIS have been important components of business growth. VCTs alone have supported businesses with £ 10 billion since their inception. It seems time to rethink the nature of these vehicles and look for ways to bring capital to businesses that are designed to run from scratch.
Essentially, the focus of this capital needs to remain purposeful, but adjustments that lift the seven-year rule or bring certain sectors back into play would not only be lifelines for more established businesses, but also a great catalyst for growth and jobs.
Imagine hospitality, pubs, hotels, and leisure being part of a broader, creative strategy to attract private investors. Immediately, thousands of businesses and jobs currently on the edge of the cliff could be saved. The hospitality sector, accounting for an estimated 10% of the UK workforce and a similar percentage of our GDP, has been decimated over the past year.
The time has come to not only ensure that the economy can be opened safely, but also to build and deliver a springboard from which the recovery can accelerate and sustain itself. The regions of the UK are ready.
Ian Currie is the founder and director of Seneca Partners Ltd., a specialist in SMB investment and advice.
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