The last fortnight has seen two seismic shocks in the UK: the ascension of a new PM on the Tuesday was quickly followed by the coronation of a new monarch just two days later. And while the death of Queen Elizabeth II has understandably superseded most political news, nature abhors a vacuum. We can expect politics.
The new Prime Minister, Liz Truss has, as promised, sought to tackle the cost-of-living crisis in her first few days. Elected largely on the back of her commitment to a low tax, high growth agenda that promises to build on the opportunities brought about by Brexit, and to stimulate the economy through tax cuts and pro-business policies, some of which will include huge amounts of government borrowing, Truss will face skepticism over whether these measures are appropriate for a nation facing double digit inflation.
Time will tell whether this new direction will kickstart and accelerate what has been a slow and fragile recovery post Covid. Recent news showed that the UK economy grew by just 0.2% in July, according to the Office for National Statistics. The figure was below the 0.4% growth expected by economists, and follows a fall of 0.6% in June.
If there’s one factor that can determine the success of failure of a growing business in the current economic maelstrom, it is the ready supply of finance. Whether that’s equity funding, bank debt or any of the variety of commercial finance products out there, financing growth can come from any number of sources.
But accessing it can be tough, and that was true even before the current headwinds created by the conflict in Ukraine, Covid, Brexit and now soaring energy costs. As one entrepreneur recently put it in a recent Guardian article, “Credit lines and banking facilities don’t seem easily available to start-ups any more. Back in 2007, the banks were very sympathetic; we got a £20k overdraft from the get-go, although we just had one client.”
However, despite the tightening of the available finance options, the UK still has a distinct advantage over its competitors. Nick Browne, one of three co-founders of Devyce says the UK is still a much easier place to set up a company. “You can get listed on Companies House in a few hours, and running costs are also a lot lower here.”
But there’s no doubt challenges remain. “Whoever is going to be in government next has to encourage investment in UK companies,” Browne says. “I don’t think UK VC funds will be getting more relaxed. The UK tech scene is brilliant, but you need that cash injection to lift off, and getting that is incredibly hard here – it’s largely doom and gloom.”
Whatever the future holds, for firms looking to invest in and set up in the UK, Paul Beare Ltd helps our clients navigate a whole range of issues. If you need help, you can contact us for help from tax and payroll to accounting and banking.