NatWest: Support for SMEs could unlock £140bn of additional GVA growth by 2030
A new New SME Recovery Report from NatWest has revealed that targeted support for SMEs could unlock £140 billion of additional GVA growth by 2030 equivalent to creating around 3.2 million new jobs across the UK.
As part of its commitment to remove barriers to enterprise and help the economy build back better and stronger, NatWest has today published the findings of an industry-wide review into the UK SME recovery, conducted in consultation with the British Chambers of Commerce (BCC), and the Federation of Small Businesses (FSB).
NatWest said that UK SMEs face a big productivity and sustainability challenge. To better understand this NatWest conducted research with over 1,000 businesses and analysed over 100 reports and support programmes globally to identity the barriers to SMEs reaching their potential.
The report, which will be shared with the UK Government as it develops the Help to Grow initiative, identifies that SMEs often struggle to find a support programme that is tailored to their needs. Only 1 in 5 SMEs find the right programme and decide to enrol on it and worryingly just 1 in 20 SMEs receive a significant productivity boost by changing their business after taking part in a programme.
NatWest found that better targeted and personalised support for SMEs can be achieved by:
- Finally achieving the step-change in SME productivity: UK productivity lags US by 17% and Germany by 12%.
- Lifting around 900,000 SMEs to the next decile of productivity
- Transforming a greater share of SMEs into ‘scaleups’
- Helping around 1700 more SMEs across the UK become scaleups and assisting the estimated 33,000 existing scale ups continue their growth journey post COVID unlocks £35bn GVA
- Increasing female entrepreneurship and productivity of women-led businesses
Improving Black, Asian and Minority Ethnic workforce participation and career progression
- Driving SME shift toward sustainability
In response to the report’s findings, the bank has today announced a series of interventions focused on scaling up micro businesses, unlocking the untapped potential outside London, and boosting skills and technology adoption, including a funding commitment of £6bn to support SMEs to scale and grow with £4bn of that allocated outside London.
The bank has also announced the creation of 30 Local Enterprise Managers and 20 Entrepreneur Acceleration Managers designed to give businesses the support they need, when they need it, and a commitment to help 10,000 NatWest customers to get the best training or growth opportunity.
NatWest has also announced strategic new partnerships with Business in The Community (BITC), Hatch and Digital Boost, to empower underrepresented entrepreneurs and communities and embed new skills and technology.
Andrew Harrison, head of business banking, NatWest, said: “The findings of this report have shown us that SMEs are not a homogenous group, and that support available across the UK need to be more closely tailored to their specific needs. We’re also seeing a continued disparity in the allocation of support and funding by gender, location and ethnicity. It’s the responsibility of our entire industry to help reset this balance to help all SMEs and by extension the UK economy to thrive again.
“In recognition of that, NatWest is delighted to be partnering with both the UK Government on the ‘Help to Grow’ programme, and with partners like Hatch and Digital Boost, to support future and existing SMEs with expertise and advice on how to get to that next level. Combined with an additional £6 billion of targeted funding, we are confident that these initial steps will help us unlock the growth for the business success stories of the future.”
Martin McTague, Federation of Small Businesses national vice-chair, added: “This report marks a helpful contribution to efforts to improve small business policy and there are suggestions here worthy of serious consideration. It’s encouraging to see NatWest championing the small business cause, and we look forward to it, and all major banks, doing absolutely everything in their powers to help small firms recover from a torrid year.
“Many are emerging with high levels of debt, low levels of cash and shattered confidence as they look to make their way in a trading environment that remains unpredictable. We need to see government, big businesses and financial service providers alike pulling out all the stops to help the small firms and sole traders that make-up 99% of our business community get our economy firing on all cylinders again.”
Adam Marshall, director general of the BCC, added “SMEs are the engine-room of the economy and their ability to bounce back and grow exponentially will be crucial to the UK as a whole as it emerges from lockdown. It’s great to see the potential of our SMEs reflected in NatWest’s new report, which hits on many of the key drivers that would enable small and medium-sized firms to restart, rebuild and renew.
“To boost productivity, SMEs need to be able to invest more in skills and digital innovation. Mentoring will also allow bosses to understand their companies’ needs and allow them to rapidly adapt to changes in the workplace and the market.
“I’m also delighted to see a clear focus on boosting diversity among entrepreneurs, which has long been recognised as an important factor in improving productivity. Of course, all of this must also be placed within the framework of the UK’s commitment to a net zero future. It’s very encouraging to see Natwest place SME sustainability so prominently in its blueprint.”