Access to Finance Stalls UK’s Business Competitiveness Score

Problems with getting access to finance has been cited as one of the main reasons that Britain’s position in the list of ‘best countries to do business in’ has fallen this year.
The World Economic Forum’s annual global competitive index was released recently and it documents how various countries around the world fare in terms of ease of doing business in. Scored out of a possible 7, the UK actually achieved 5.4, the same as last year’s value; however Japan and Hong Kong bettered their 2012 performance, taking them above the UK in the standings. The WEF was keen to stress that ‘ease of gaining access to finance’ was the main reason behind the stagnant score; however it praised the UK’s tax rates, innovation and business regulation.

On the other hand, the cross-party think tank Demos disagrees, having published a report that found only 40% of small companies applied for business finance over the previous twelve months with only 1 in 4 being turned down. Director Jodie Ginsberg pointed out that the theme of ‘banks not lending to small businesses’ has been a slightly wide-of-the-mark undertone since the onset of the financial crisis in 2007. Whilst business finance can still be hard to come by for those seeking access to finance for the purposes of international growth, acquisitions and buyouts, the green shoots of recovery are arguably more visible than ever before.

Another report, released recently, suggested that growth forecasts are at a three-year high, with a new breed of lenders seeking to address some of the challenges faced by small and medium sized companies struggling to get that all-important access to finance.

Switzerland remained in the top spot on the WEF’s list, followed by Singapore and Finland. Germany, the US and Japan also made it into the top ten. It is likely that due to the country’s large selection of financial institutions, getting access to finance is relatively straightforward in Switzerland. A favourable tax rate has also been cited.

The priority for UK growth now has to come from the very top, with the government being urged by accounting and business firms to provide the kind of fertile environment required to foster business growth initiatives now and in the future.

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