Go German for Growth

They employ around 50% of the working population of the UK, have been instrumental in making the German economy the powerhouse of Europe and are seen as the greatest single hope for pushing the UK economy out of the financial crisis. Who are they? SMEs. ‘Small and Medium Enterprises’, companies who are independent and employ up to 250 workers. Warrington and region is blessed with large leading organisations in the logistics, automotive, pharmaceuticals, energy and chemicals sectors. Larger firms often benefit from high-level government intervention, but SMEs are left lacking support. For anyone who talks to SMEs regularly then the obstacle of finance is frequently cited as preventing them from growing into larger firms (for those that want to grow that is!). Why is this the case when interest rates are low and the banks have had cash injections to make funds available for investment? It seems that lending criteria are still a barrier and banks restrictive. In Germany, bank lending to the ‘Mittelstand’ companies of the country, high-tech SMEs at the backbone of the economy, is proving to be highly profitable. And the bond markets are tapping into this too. The UK government (with taxpayer’s money) now owns (and therefore controls) bank stock. Why can’t our SME’s have the same opportunity? It’s just good business.

Lawrence Bellamy is a Professor at the Warrington School of Management, University of Chester