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Peer2Peer Finance News | September 23, 2019

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Budget 2018: ‘No sign of end of austerity for SMEs’

Budget 2018: ‘No sign of end of austerity for SMEs’
Marc Shoffman

GOVERNMENT commitments to end austerity have been labelled as “words not actions” by peer-to-peer lender ArchOver.

Chancellor Philip Hammond (pictured) said that the “era of austerity is finally coming to an end”, in his last Budget before Brexit.

However, Angus Dent, ArchOver’s chief executive, said the latest Budget did not do enough to help small- and medium-sized enterprises (SMEs).

Business rates have been cut by a third for retailers and Hammond pledged an increase in the annual investment allowance from £200,000 to £1m for two years, but Dent lamented that there was little else.

“A definitive step forward like reducing business rates is long overdue – particularly for small retailers struggling on the British high street,” he said. “But this isn’t enough to cure a decade of difficulty for UK SMEs.

“While it could be seen as damaging for the chancellor to offer businesses something that could derail negotiations with the EU, this doesn’t mean to say that he shouldn’t. Once Brexit negotiations are on the straight and narrow, the government needs to demonstrate that it believes in the future of British business.”

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John Mould, chief executive of another P2P business lender, ThinCats, echoed Dent’s concerns about whether the chancellor had gone far enough in his support for SMEs.

“From a business point of view, the chancellor’s speech was upbeat and aimed to provide as much certainty as possible,” he said. “Given the circumstances, some of the measures will be welcome from SMEs and bigger business too.

“Bank finance has not supported all parts of the economy, most critically, growing SMEs. Strengthening the British Business Bank who can invest directly through preferred providers will help UK jobs, growth and productivity.

“The question is whether he went far enough. We are going into unchartered territory what with Brexit and the economy needs a brave radical boost.”

Read more: UK government unveils first fintech strategy

There were some announcements that were pertinent to the fintech and credit sectors. Hammond confirmed plans for a pilot of a no-interest loans scheme, to give cash-strapped individuals an alternative option to high-cost credit providers such as payday lenders.

The government will also provide £2m prize for entrepreneurs who can create innovative technological solutions to support affordable lenders.

“We are delighted the government continues to recognise that fintech companies have a significant role to play,” said Charlotte Crosswell, chief executive of Innovate Finance.

There was also a £1.6bn commitment for research and development in artificial intelligence, quantum computing, future manufacturing, and nuclear fusion.

“With Brexit around the corner these signals will play a role in shaping perceptions of the future of the UK’s financial technology and fintech sectors,” Niels Turfboer, managing director of fintech balance sheet lender Spotcap, said.

Read more: London stakes claim as fintech hub with new initiative

The government also pledged to provide up to £200m of additional investment in UK venture capital and growth finance in 2019-20 if the European Investment Bank withdraws its support after Brexit.