Is Britain shedding some 700,000 new jobs because of pure indifference to micro businesses? In a perfect world, or at least a more enlightened one, the debate taking place in the UK should be followed by a wider European Union programme in support of these smaller, less than 10-employee enterprises, among which the new big corporations of the twenty-first century might be painfully sitting on pause mode. Judging by the British data, they cannot keep it up for much longer.
The root of their travails isn’t peculiar: it is the same lack of credit amid which the rest of the economy struggles to catch its breath, too. But unlike the massive injections of cash needed when the time comes to salvage parts of whatever industry that falls trapped in the financial crisis and the changes triggered by new technologies, this is a case much easier to make. On average, just £2,140 get a micro business all set. Yet, banks won’t budge either for them. According to One Poll data, 3.7 million micro businesses out of 4.6 million in the UK couldn’t find a bank willing to lend them the money.
To be sure, not all bright ideas are as tingling and sparkling as they usually seem in their entrepreneurs’ mind, and an apparently unstoppable stream of regulatory constrains is forcing our banks to behave with ever more caution. Even so, 22 percent of those micro businesses that have been successful reported they are in a position of hiring… and have had to abandon their expansion plans due to luck of funding.
If, as the European Commission says, “more than 99% of all European businesses are, in fact, SMEs (see definition of SMEs),” if they provide “two out of three of the private sector jobs and contribute to more than half of the total value-added created by businesses in the EU” and “moreover, SMEs are the true back-bone of the European economy, being primarily responsible for wealth and economic growth,” European governments are clearly missing the chance to generate at least a few millions of new jobs.
James Benamor, founder of alternative lending company Amigo Loans–and he is supposed to be profiting from the current credit freeze in the banking sector–said in a press commentary on the One Poll survey: “It’s scandalous that, despite billions of pounds worth taxpayers’ money being given to them, they are not lending to these entrepreneurs who are the life blood of our economy. Banks have forgotten why they exist.” Looking at how politicians from London to Brussels manage our economic recovery, banks are definitely not alone in their carelessness.