By Daniel Lanyon on Thursday 12 March 2020
Chancellor Rishi Sunak delivered a ‘getting it done' Budget heavy on spending, following a juicy interest rate cut by the Bank of England, to combat the Coronavirus.
The Chancellor Rishi Sunak’s first budget came at a time of severe market stress. It included a number of eye-catching policies including an independent major review of UK fintech, to be chaired by Ron Kalifa, as well as a review of the EMI scheme, £200m for the British Business Bank and other measures to boost R&D in technology.
In this article, we round up the industry reaction to Budget 2020.
Charlotte Crosswell, CEO, Innovate Finance
“We welcome the focus in the Chancellor’s Budget on R&D, tech and life sciences investment and the subsequent inclusion of an independent major review of UK fintech, chaired by Ron Kalifa,
“The last decade has seen fintech emerge as one of the most important parts of our economy. It is attracting record levels of investment, and as a result helping to bring new services, increased choice and value in the market, and more jobs to the UK.
“We are at a crucial moment in fintech’s development. UK companies are now entering a phase of maturity that requires action to ensure that entrepreneurs can not only establish and scale their businesses in their home market, but also export their products and services internationally.
“By better understanding the needs, requirements and key focus areas for the sector, we will put ourselves in a strong position to boost the fintech industry, and in turn support the economy as a whole. This should bring benefits not just in London and the South East, but also to those vibrant fintech hubs across the UK.
“Fintech has changed dramatically since the Fintech Delivery Panel was first established in 2017, with UK Fintech firms raising a record £4.1bn in 2019. This announcement of extending the Fintech Delivery Panel to 2022 couldn’t be more timely, confirming the commitment of the government to support the continued growth of the fintech and insurtech sectors in the UK.”
Chirag Shah, CEO, Nucleus Commercial Finance
“[The] announcement is welcome news for Britain’s hard-working retailers - a sector that has seen several years of uncertainty surrounding Brexit and, more recently, Coronavirus taking its toll. The abolition of business rates in 2020 to all SMEs with a rateable value below £51,000 is the support they have long been hoping for.”
“With three quarters of SME owners saying that a reduction to business rates would improve their ability to deliver on their business ambitions, today’s news provides a boost to create a level playing field where the highstreet can once again compete with online retailers. While this announcement provides immediate relief to small businesses, the Chancellor must now deliver long-term plans for the future of business rates in the Autumn Statement.”
Lisa Jacobs, UK Managing Director at Funding Circle
“We welcome the measures announced today and are pleased that the Government is supporting small businesses through the worst of the coronavirus outbreak. We also believe by working together with the Government, lending platforms like Funding Circle can play a crucial role in supporting thousands of hardworking SMEs across all regions and sectors of the UK. We stand ready to help mitigate the impact of this terrible outbreak.”
“The country desperately needs economic stimulation, so the Bank of England should be praised for acting now. However, it takes time for rate cuts to stimulate the economy, and the man or woman on the street will immediately feel the impact in lower bank savings rates and stocks prices.
“The fixed rates offered by peer to peer lenders like us are not directly affected by rate cuts, so we expect more people to opt for peer to peer investments in the near future.”
Niels Turfboer' MD, Spotcap
“The UK Budget today was understandably mainly focussed on the current economic situation and the uncertainty around the coronavirus outbreak. That aside, it was great to hear that the Chancellor Rishi Sunak acknowledged the importance of innovation and technology for the UK to succeed in the global economy. In my opinion, this applies in particular to the UK’s thriving fintech sector. The announcement of the Chancellor to increase public R&D investment to £22 billion per year by 2024-25 as well as increasing the rate of R&D tax credits is therefore great news.”
“We also welcome the funding announcements for UK businesses – including £130 million of new funding to extend start-up loans and £5 billion of new export loans for businesses. Too many companies still struggle to access the right finance to reach their full potential. The additional funding will hopefully support more businesses, helping them to grow and hire more staff. This will – ultimately – benefit the UK economy as a whole.”
Simon Cureton, CEO, Funding Options
“The outlook for small businesses is certainly brighter after this budget. The government’s pledge to offer loans of up to £1.2m to small businesses affected by the coronavirus is one that will be welcomed by those who are concerned about their cashflow during this difficult time. "However, it’s important that businesses eligible for these loans act responsibly; affordable finance is important at a time like this, but the government needs to be clear about what the terms of their guarantees actually are.”
“What we don’t want to see is a situation where businesses borrow beyond their means, and struggle to stick to the terms of their loan agreements in the months to come. In this case, we’d simply be delaying their hardships."We’ve already seen an increase in applications for working capital loans, so it’s clear that this is something that’s being demanded by small businesses. "We are only at the very beginning of this health crisis, and the effects of COVID-19 on businesses are only just beginning to emerge. It is very likely that the worst is yet to come, and organisations large and small need to plan for every contingency.”
Oliver Prill, CEO, Tide
"As a business dedicated to supporting micro, small and medium-sized businesses, we are very pleased to see the UK government announce measures to ease the pain of the outbreak of the Coronavirus for UK SMEs.”
“Our research reveals that UK SMEs are lacking confidence in the UK economy and their ability to grow their businesses in the short term. More than half (52%) are concerned their business income will decrease over the next quarter and 57% are unlikely to be able to invest in growing their business in the coming months. Respondents highlighted Coronavirus as a key concern, with the impact on imports (particularly from Asia), limits on travel, the resulting impact on global political stability, and the market volatility being regularly cited issues.
“The additional support announced for businesses to have statutory sick pay covered by the government for 14 days per employee will undoubtedly relieve pressure. The ability for businesses and the self-employed to defer tax payments will also be very welcome, as well as the Coronavirus Business Interruption Loan Scheme, business rates cut and availability of a £3,000 cash grant for the smallest businesses.
“However, with UK SMEs being ever-more exposed to the global economy, our concern is the long-term impact the Coronavirus could have. The reliance many businesses have on international suppliers and trade is significant and is likely to have a devastating effect.
“In addition to the response to the Coronavirus, we were disappointed to see a reduction in Entrepreneurs’ Relief, but understand the need for reform and will keep an interested eye on how it impacts UK SMEs"
Rhydian Lewis, CEO, RateSetter
“The UK’s reputation for fintech innovation across investments, payments and banking is second to none and the fintech industry is delivering greater value, utility and financial inclusion to many millions of people.
“The fintech sector is maturing and becoming mainstream, and I warmly welcome the Chancellor’s timely announcement of a strategic review to ensure that the best fintech businesses can scale up to become major financial brands, both in the UK and internationally. I look forward to engaging with Ron Kalifa on the review.”