As the UK covid-19 situation gets ever more parlous, it somehow feels counter intuitive to turn our minds to how the country will bounce into a recovery. However, as the fantastic work of our scientists and the government’s scaled-up vaccination roll-out both bring new hope, that is exactly how we must plan. The sheer will and fighting spirit of the UK population will at some point turn the tide for our beleaguered businesses. Hope and optimism are commendable traits, 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 figures rising but reports of many businesses hanging on by their fingertips only surviving due to the vital infusions of vast financial support provided by UK government. We all know it cannot go on at these stratospheric levels, and whilst in the short term there are few alternatives, the medium and longer-term prognosis requires different thinking if our recovery is to be sustained.
If we accept that government handouts must soon come to an end, then they must be replaced with a very serious investment programme – a platform that creates real entrepreneurism, that creates new jobs, booming productivity, and sustainable growth. Repaying the vast amounts of debt created by fighting our way through covid-19 cannot come from asking already weakened businesses to take on the further burden of increased taxes. That only ends one way as far as unemployment figures are concerned. Instead, the UK must recover and grow by being a world-leading place to invest.
Infrastructure and connectivity investment in the regions have been talked about for ages but it needs to happen now at scale. In due course it needs to underpin thriving private enterprise and. give our entrepreneurs the environment to flourish. Encourage them, make it easier for them, reduce taxes rather than increase them. This is not about dealing with the Nation’s debt in short order; it’s about building long term growth. Borrowing rates are at an all-time low and now is the time to capitalise. A vibrant, growing economy will make it far easier to deal with our debt levels, over the long term anyway. Brexit also gives us the opportunity to access wider global markets, to grow our exports and help our balance of payments. It feels like the time is here for us.
The UK regions are desperate for the government to start to deliver on its commitment to ‘levelling up’, with many stellar businesses ready to grab this opportunity to recover by the scruff of the neck. Sooner rather than later financial support measures must give way to tangible investment to wean businesses and their employees off loans and grants. Our population needs to be working and producing again to begin paying off its covid-19 induced debt. This responsibility doesn’t all fall on the government, but it must create the platform for private investment to start to fuel the recovery.
Tax advantaged investing will have a clear role to play, by incentivising the private sector to back its own growth. VCT and EIS have been vital components in helping businesses to grow. VCTs alone have backed businesses to the tune of c£10 billion since launch. It seems timely to revisit the nature of these vehicles and look at ways to drive capital into businesses which are set to lead from the front.
Essentially, the focus of this capital must remain well targeted but adjustments which remove the seven-year rule or bring specific sectors back into play would not only be lifelines for more established businesses but also huge catalysts for growth and employment.
Imagine if hospitality, pubs, hotels, and leisure were part of a broader, creative strategy to attract private investors. Immediately, thousands of businesses and jobs which currently stand on the cliff edge could be saved. The hospitality sector accounts for an estimated 10% of the UK workforce and a similar percentage of our GDP and have been decimated over the last year.
The time is here not only to ensure the economy can be opened-up safely, but also to build and deliver a springboard from which its recovery can be accelerated and sustained. The regions of the UK are ready.
Ian Currie is a founder and director of SME investment and advisory specialists, Seneca Partners Ltd.
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