UK SMEs dealing with limited access to bank loans and ineffective regulation could hinder economic growth and risk appetite, the Treasury Committee warned.
In a report published on Wednesday (8 May), MPs said a “difficult small business environment” is “disincentivising risk-taking, innovation and, potentially, growth” for many UK SMEs looking to expand.
As a result, the number of private sector businesses have dropped significantly from 6 million in 2020 to just 5.6 million in 2023, after initially expanding by 1.5 million within a decade from 2010.
According to the report, the government should improve access to finance for SMEs, including abandoning more stringent capital requirements, currently in place due to the Prudential Regulation Authority’s new Basel 3.1 standards risks.
At the same time, MPs recommended the authorities should conduct annual assessments of the British Business Bank and find a better way to support SMEs currently served by the Business Banking Resolution Service (BBRS), which the report argued was “ineffective” and lacking independence.
MPs recommended that BBRS “should close as planned”.
