"Helping SMEs to recover and build for a stronger future is an essential route to supporting long-term employment security and job creation."
21 MAR 2021
When the UK Chancellor, Rishi Sunak set out the Budget last week, his words struck a chord: ‘if we want a better future we have to do things we’ve never done before.’ I believe his words should act as a rallying cry to governments and businesses alike.
Covid-19 has disrupted economies, businesses, families, and disproportionately affected some communities more than others. As vaccines are rolled out and a sense of normality feels to be just around the corner, we have a lot to be optimistic about, not least the opportunity to do things differently and to address those inequalities longer term.
One very practical way we can do that is via the support offered to SMEs, the backbone of most major global economies. Helping SMEs to recover and build for a stronger future is an essential route to supporting long-term employment security and job creation. £145 billion in economic output – equivalent to 2.7 million jobs nationwide – could be delivered by empowering SMEs to realise their appetite for technology investment in the UK alone.
Sage supports SMEs in over 20 countries, and it is reassuring to see many governments placing them at the heart of their economic recovery plans. Equally reassuring is the recognition that digitisation and access to markets must be central to giving SMEs confidence to build for a long, prosperous future.
In the UK, we are pleased to see the Government implementing measures we have long supported. Super-deduction will encourage investment in plant and machinery by enabling businesses to reduce their taxable profits by 130% of the cost. However, it’s not yet clear whether capital investment in technology will be included in the scheme. If not, this could be a missed opportunity to empower a digitally-led recovery.
The Help To Grow scheme will offer SMEs guidance, encourage investment in digital technology and management training for small business leaders. It will power innovation and job creation for thousands of firms across the country and, most importantly SMEs are telling us that is what they need. In the UK, 73% of SMEs have turned to technology during the pandemic to keep their business functioning, while 67% would like to invest more but 1 in 2 currently do not have the funds.
In Europe there is already huge momentum towards digitisation, which is a key pillar of the EU’s €750 billion pandemic recovery fund. The German Government has launched a targeted programme to drive digital adoption among SMEs by offering grants to stimulate investments in SMEs. In Spain, a third of the €140 billion received from the EU Recovery Fund will go towards digitisation.
The US and South Africa, meanwhile, have focused on strengthening SME access to domestic and international markets. President Biden’s Buy American Act aims to make contracting with federal government more accessible for smaller businesses and strengthen local supply chains. South Africa’s Government is actively encouraging private and state-owned enterprises to buy locally and has allocated R4bn (£186m) in support to help small businesses in townships and rural areas develop and grow beyond their neighbourhood.
These global government initiatives reaffirm my belief that when SMEs thrive, we all thrive – employees, communities and economies. Of course, the responsibility does not only lie with government alone. I believe we can all do our part. Bank of England data shows UK households deposited an additional £18.5bn in bank accounts in January, increasing the reserves that could drive recovery once the economy reopens. We must show our solidarity and support by spending with SMEs to keep our economies moving.
The business community also must play a proactive and vital role in supporting SMEs and stimulating growth. At Sage, we recognise the pandemic could disproportionately affect minority-owned small businesses and have developed a 12-month Enterprise and Supplier Development Programme to empower small Black-owned businesses in South Africa with the skills to become Sage Business Partners, as part of our R46m (£2.1m) investment towards upskilling local communities.
In Iberia we put aside €1m to provide online training and webinars for customers, with similar support tools available for customers in France and Asia.
We’re proud to support our home region of the North East through a £1.4m partnership with the North of Tyne Combined Authority, providing free training and software to up to 62,500 businesses and aspiring entrepreneurs across the region.
SMEs created 73% of new jobs in the UK after the last recession. With the right support, they can do so again – and perhaps even do more.
But as any entrepreneur will tell you, going it alone is hard – and coming out of a global pandemic is even harder. With so much economic growth, job creation and employment at stake these recent government announcements must not be a ‘one and done’ approach. They must be the foundations for ongoing, practical support that recognises and builds upon the incredible resilience, creativity and agility we’ve seen from SMEs over the last year. Global businesses can no longer just cheer from the side lines. If we want a strong recovery with fair access to opportunity, we need to do a better job of creating commitments, tackling inequalities.