Should the UK Government unlock the potential of UK Small Businesses as the backbone of the UK economy to create growth

The transformation of Bounce Back Loans into grants could hold the key to revitalising the foundation of the UK economy – its small businesses. By converting the outstanding balance of around £28.3 billion into grants, the government could alleviate the financial burden weighing down numerous enterprises. This shift would provide immediate relief and serve as a catalyst for rejuvenation, enabling businesses to channel resources into pivotal areas such as operations, workforce expansion, and innovation.

The UK's small business sector is currently experiencing a perfect storm of challenges that have cast a dark cloud across the UK in recent years, ranging from the social and economic impacts of COVID-19 pandemic to the complexities of Brexit and geopolitical tensions. Small businesses, constituting a staggering 99% of UK enterprises, have absorbed the impact of these events, confronting unparalleled economic and social upheaval. To pave the way for the recovery and expansion of the UK economy, it is imperative for the government to take decisive measures in supporting these businesses.

In response to the unpredictable terrain of the pandemic, the UK government introduced the Bounce Back Loan scheme. This initiative aimed to provide businesses with much-needed financial assistance to recover from the impact of the Pandemic and lockdowns.

In the hight of the pandemic many self-employed business owners and small Limited Companies, had little choice but to turn to the Bounce Back Loan to provide desperate monetary assistance to try and help their small businesses Bounce Back from the devastating impacts of the Covid 19 pandemic.

However, this apparent financial lifeline promoted by the UK Government in the hight of unprecedented social economic and mental and physical health crisis, came with the weight of repayment, compounded by the surge in interest rates and now also the worst cost of living crisis in generations and spiralling businesses and domestic energy costs.

Over the last 4 years small businesses along with the rest of the UK have faced a multitude of impact events including unprecedented economic and social events.

Regardless of position and views around the UK departure from the EU this has seen impacts on the UK from the economic impacts through to trading and staffing issues impacting small businesses across the UK to marketing access impacts for businesses and supply chains in the UK.

The UK has also faced unprecedented political turmoil since 2019 from the snap general election on the 12th December 2019 coming just 30 months after the 2017 General Election.

Since the 2019 snap election the UK has to date had three Prime Ministers.

One of those serving just 19 days and creating one of the worst economic impact events this country has seen in decades leading to the removal of Liz Truss as PM by her party.

The UK is also facing the heavy impact of the Russian invasion and war in Ukraine that has seen cost of living in the UK skyrocket as food and fuel costs have risen to levels never before seen in the UK.

 

The combined impacts of the pandemic, Brexit, War, increased costs and the Truss economic implosion that resulted in the value of the British pound collapsing and destabilising the economy have all seen a cumulative impact on the UK small businesses sector that collectively is the backbone of the UK economy.

With 5.6 million small businesses in the UK with an average of 0-49 employees, and in the words of Liz Barclay Small Business Commissioner “really are the backbone of the UK economy”.

As we come out the back of the COVID-19 pandemic, the impact on businesses in the UK has been stark. The number of businesses in the UK fell by 6.5% between 2020 and 2021, only the second time the number of businesses has fallen since 2000. 99% of businesses in the UK are SMEs so it has never been more important to support those businesses to achieve sustainable growth.

The unprecedented impacts on the UK over the last few years not least that of the Covid-19 pandemic and the sustained lockdowns needed to help protect the population and the NHS have left unprecedented impacts on UK small businesses. Many UK high streets lay testament to the scars of the pandemic impacts on small businesses in a visual sign of the hidden economic pandemic sweeping the UK as small businesses continue to battle the impacts of the last few years.

The UK government has an unprecedented task ahead to rebalance and deliver sustainable growth as the UK battles to recover from the impacts our country has endured over the last 4 years.

If the UK failed to protect its economic backbone of its 5.6 million small businesses then any measures to recover and grow the UK economy will collapse into failure.

The UK government has at its disposal the ability to deliver meaningful help to the millions of UK small business many struggling to stay afloat as the UK sails its troubled waters.

Many facing monthly repayments of the £28.3 billion Outstanding Balance of Bounce Back Loans pushed by the UK government during the hight of the pandemic when many businesses faced the start uncertain future as they were forced to close due to lockdowns and the impact of the pandemic.

The UK Government could act to clear the £28 billion weight that risks snapping the backbone of the UK economy that is risking the collapse of millions of UK small business. Turning the Bounce Back Loans into grants and clearing the £28 billion debt would instantly improvise the prosperity and growth potential of millions of UK small business and unlock the growth potential of the UK economy as the 5.6 million small businesses in the UK bounce back with the weight of the burden of Covid debts removed.

As the UK emerges from the complex aftermath of the pandemic and navigates through a challenging landscape, it stands at a crossroads. The government possesses the power to extend a lifeline to countless small businesses striving to remain afloat. The transformation of Bounce Back Loans into grants would deliver transformative economic growth, empowering these enterprises to surmount financial obstacles and contribute to the country's economic revival. By recognising the pivotal role of small businesses and executing steadfast action, the UK government has the opportunity through rapid enactment of removal of the burden of debt on the backbone of the UK economy to lay the groundwork for a resilient and prosperous economic future for the UK. The confluence of challenges, and leaders in recent years reflects the nation's journey through a trying era, and the response to this critical juncture in the UK’s pathway to recovery will undoubtedly shape the trajectory of the UK's economic landscape and needs leadership to deliver for Britain and its millions of small businesses, their employees and those who rely on the small businesses across the UK as the backbone of the British economy.