SMEs face business support black hole post-Brexit
Billions of pounds in EU funding aimed at supporting small firms must be replaced to avoid the risk of an economic slowdown post-Brexit, researchers have warned.
A new report by the Federation of Small Businesses (FSB) is calling on the next Government to radically reform England’s business support landscape. Reformed Business Funding: What small firms want from Brexit finds that 78% of small firms have sought business support services over the past 12 months. Those in Yorkshire (25%), the North East (22%) and North West (18%) were most likely to submit applications for EU-funded schemes.
Of those that have applied for such schemes, the majority believe EU funding has had a positive impact on their business (68%) and local area (64%). The report finds a clear relationship between the likelihood of applying for business support and growth ambitions among small firms. Those looking to grow by 20% or more are far more likely to apply for support (89%) than those that aspire to remain the same size (65%).
The FSB is calling on the Government to create a streamlined Growth Fund for England before the Brexit process completes. The Fund would bring together a domestic replacement for EU funding and the Single Local Growth Fund (SLGF). The EU has dedicated £3.6bn to developing the competitiveness of UK small firms for the funding round ending in 2020. There is currently no regional development spend budgeted at the national level beyond 2021.
Mike Cherry, FSB national chairman, said: “Small businesses across the country are staring into a business support black hole from 2021 … If the next Government is serious about developing an Industrial Strategy that delivers prosperity across all areas of England, it must replace EU funding dedicated to small business support and access to finance after we leave the EU.”
Cherry warns that “a shock to the business support landscape will have serious implications for small business aspirations as well as efforts to improve productivity and rebalance the economy”.
He said: “Brexit marks an unprecedented opportunity for fundamental reform. LEPs and Growth Hubs must be empowered to tailor and simplify support according to local requirements. Ensuring that all small firms are aware of business support schemes should be a top priority.”