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The summer of growth: UK SMEs to play a key role in the resurgence of the economy

Economic growth in February and end of restrictions points toward strong growth for UK firms

Luke Davis, CEO of IW Capital discusses how SMEs will help boost the nation’s recovery and future growth.

Throughout the pandemic and one of the most turbulent economic periods in history, small businesses have shown true resilience against the tight restrictions that have been put in place. The UK’s return to growth in February highlights the adaptability and resilience of businesses throughout the pandemic, with the nation’s GDP estimated to have grown by 0.4% despite lockdown. In addition, the services sector also grew by 0.2% in the same month as wholesale and retail trade picked up. 

Now, as the nation’s lockdown measures ease and shops, pubs and restaurants finally reopen their doors for the first time in months, Britain’s economy is poised for recovery, with both business and consumer confidence surging and many predicting an economic rebound this summer. After already seeing growth coming into the year amid lockdown, we are sure to see this continue as we venture into the summer months, with SMEs playing a key role in the resurgence of our economy post-pandemic as lockdown measures ease. 

Such optimism among small businesses shows that there is a clear desire for growth investment in 2021, with private capital being a vital catalyst for wider economic growth. With a 13% increase in new businesses starting up during 2020 compared to 2019 and with 20% of people looking to start or are in the process of starting a new business despite Covid, 2021 is set to create some exciting investment opportunities for investors throughout the country and with business sentiment on the rise, we are sure to see a boost to the wider British economy. 

What we are now seeing is the boost in confidence translate into the appetite among investors to back these sectors, with many having faith that pent-up demand and post-lockdown spending will act as a springboard to recovery for these businesses and will be a catalyst for future growth later this year. With private investors representing a key barometer of where the money is going post-lockdown, this will be welcomed news to businesses within hospitality and retail as they look to capitalise this summer. 

Key statistics: 

  • 29% of UK investors will back online retail businesses (5,033,000)
  • 18% of UK investors are backing the creative industries in 2021 (3,050,000)
  • 16% are investing into the hospitality sector (2,741,000)
  • 16% of UK investors are looking to back start-ups and newly formed businesses in 2021 (2,738,000) 
  • 44% of investors are now looking to back UK-based companies, instead of global firms (9,629,000)
  • 19% of investors believe the coronavirus pandemic has opened more investment opportunities than it has closed (6,278,000)

Luke Davis, CEO of IW Capital:

“It’s truly great to see that SMEs throughout the nation are looking to the year ahead with optimism and have high hopes that their sales revenues are going to rise. As we turn a new page this year, it’s vital that these businesses are supported through equity investment to enable faster recovery and future growth, that will be a huge asset in the resurgence of our economy, with the SME community making up 99.9% of private sector businesses.

“Working with both entrepreneurs and investors, there is a clear desire from the small business community for growth investment and to take a big step growth-wise in 2021. Small businesses grow by hiring and this sector will be key not only to growing the economy but also combating unemployment. Each problem or crisis will have winners and losers but those that are adaptable and in position to take advantage of the situation could see a big increase for business in 2021.

“UK businesses have shown true resilience throughout the year and we have even seen the emergence of new businesses starting up, which is sure to create some exciting investment opportunities and will play a key role in the nation’s recovery. Investors now need to look towards these businesses in order to enable future growth post-pandemic. 

“People want to get out and spend, businesses want to grow and investors want to help them do that, it’s a perfect storm for rapid growth. Pubs will bounce back along with restaurants and other hospitality, no one will want to stay at home after the year we’ve had and I really believe that. Working with local residents on redeveloping the pub and hospitality venue Rockwater Hove has shown me how much people want, more than ever, a place to come together as a community. We are not out of the woods yet, but the sun will almost certainly be shining when we are.”

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