All eyes on the Budget as Rachel Reeves seeks green shoots

You’ll be glad to know this piece isn’t about my views on President Trump, but as business leaders and politicians headed off on their summer holidays, with the latter desperately looking for ideas to grow the economy, there may have been a few people who take the view that while they may not especially like Trump’s style, he is correct when it comes to oil and gas.

While the next big political “moment” is the PM’s party conference speech, the real focus for businesses are what the Bank of England decide on interest rates and the Chancellor’s Autumn Budget.

Last month, Chancellor Reeves delivered her annual Mansion House Speech to the City of London to give the financial services industry a sense of direction on what the Government is doing to support the industry.

The Chancellor’s speech hit some welcome notes – reiterating a focus on growth over tax, cutting regulation, and mobilising private capital. Or, to use the Chancellor’s exact wording, stamping out the “boot on the neck of businesses”. There is a considered view that post financial crisis, we have possibly overregulated to the detriment of growth. Indeed, there’s no risk without reward. But let’s not lose sight here.

While it is encouraging to see and to have an industrial strategy with policies that support an important sector to the economy in financial services, what’s important to remember is that financial services in itself won’t grow the economy. We can provide the capital and indeed lenders like ThinCats are supporting businesses where many banks no longer have the expertise to do so, but it’s more so vital that there are policies to incentivise startup businesses, who can then create jobs, acquire other companies and continue to grow.

It is possible to be very complimentary to bankers, insurers and asset managers, but what matters is how businesses think and act. More taxes and red tape will not help at all. But get it right and we could see those green shoots that the Government desperately needs.

Our analysis shows that borrowing fuels growth. Mid-sized firms borrowing over £5 million are 16 times more likely to hit “super growth” – 50 per cent growth above inflation – than they are to face insolvency. When capital flows, so does business growth.

Business confidence remains fragile. The FSB recently shared data showing that more businesses expect their company to shrink or to close in the next year compared to the number who expect their business to grow. That’s really worrying. Sentiment among corporate advisers show only six per cent believe government policy supports SME growth, while over half say it actively hinders it.

Yet there are reasons to remain hopeful: 35 per cent report cautious optimism, citing improved market conditions, stable funding, and pent-up demand.

All eyes are therefore on the Budget. Businesses will be hoping Chancellor Reeves sticks to the fairways rather than the bunkers and water hazards that will increase their costs.

Ben Kimball, Senior Director, ThinCats