Credit Shortage preventing "levelling up"
Lack of trust between banks and businesses
A shortage of lending to Britain’s small businesses is preventing the UK from “levelling up”, according to a report published by a group of cross-party MPs today.
The All-Party Parliamentary Group in its report, “Scale up to Level Up”, has warned that a lack of trust between banks and businesses has restricted the supply of credit to SMEs in the UK, creating a multi-billion pound funding gap.
The lack of finance restricts business growth and is hampering the government’s ambition to “level up” and address regional inequalities and opportunity.
Danny Kruger MP said: “We need lenders whose interests align with those of the community as a whole…[community development finance institutions] are more flexible, don’t have blanket lending policies and can apply real human judgement to the decisions they make about lending.”
Theodora Hadjimichael, chief executive of Responsible Finance, said: “Access to finance remains the major block to SME growth in the regions, deprived areas and among demographics under-served by mainstream and so-called challenger banks. And levelling-up will not be delivered solely by building projects in red-wall constituencies.”
