Entrepreneurs are uncertain about the future of Britain. That was a key finding from our inaugural Risk Readiness Report with Mishcon de Reya. It found that the challenging economic climate, supply chain disruptions and our unfavourable tax regime to be the most common risks impacting entrepreneurs’ businesses. And they expect things to get worse: not even a quarter (23%) of entrepreneurs believe the level of risk in the business environment will be lower in 12 months’ time.
As Beauhurst revealed this week, equity funding has dropped off a cliff, with just 491 deals announced in Q3 2023. That’s a 17% decrease from the same period last year, and a 37% decrease in the amount invested. In fact, it’s the lowest number of completed deals in a quarter since Q3 2018.
This lack of business and investor confidence makes next week’s Autumn Statement all the more important. There is enough risk out there already without the added weight of political risk exacerbating things.
A glimpse of a silver lining comes in hearing that the Chancellor is considering extending full expensing – which allows firms to deduct the full cost of any new investment in productivity-enhancing equipment from their corporate tax bill – into the next parliament. He should make it permanent.
As our Adviser Sam Dumitriu notes, between 2010 and 2019 the Annual Investment Allowance changed six times. “A ‘use or lose it’ time limited sale might be a great way for DFS to shift some sofas,” he writes, “but it is a terrible way to get business to make multi-million pound investments.”
The need for business certainty extends across many areas of policy. It’s why Hunt really needs to confirm the future EIS and VCTs on Wednesday, and why he should also take heed of Startup Coalition’s warning to offer stability and compromise around R&D tax credits, which have been chopped and changed to the deep detriment and distrust of entrepreneurs.
Call Him Cameron
Who could have predicted it? However, like everyone else, we have written about the former PM’s return to politics. But more importantly, we’ve also dissected the wider reshuffle, and its impact on entrepreneurs, in the latest All-Party Parliamentary Group for Entrepreneurship monthly newsletter. Check it out.
Justice for the Young
Those of a nervous disposition should look away now. First shot: To keep pace with the cost of the welfare state, the UK will need to see annual economic growth of 2.9% over the next 50 years – a rate it has hit just twice in the last two decades, excluding the post-pandemic rebound.
Second shot: By the end of 2026, the UK will have more people aged 65+ than under 18 for the first time in its history.
Third shot: On current trends, the workforce is set to start shrinking in absolute terms as soon as 2043, potentially ushering in an era of negative growth. By 2072, the UK will have 1.9 potential workers per pensioner, down from around 3.3 today.
Chaser: Eamonn Ives, our Head of Research, and others have written for the CPS about how to fix things. Eamonn’s chapter in Justice for the Young is on the Power of Entrepreneurship and covers everything from planning policy, transport, culture and immigration. Recommended reading.
More Chaser?
Valentina Kristensen, Director of Growth and Communications at OakNorth has joined us as an Adviser. Valentina has been a big supporter of the ecosystem, most recently by supporting some solid research on scaleups by the Social Market Foundation – Full Scale and The Scale of the Opportunity.
We ask all our Advisers to let us know why they think the UK is an attractive place to grow a business. Valentina quotes OakNorth’s co-founder and CEO, Rishi Khosla: “The UK has so much to offer: we have world-class research universities (four of the world’s top 10 universities are here); forward-thinking regulators with an open approach to innovation; a strong framework of common law and a common language; and a timezone that allows true global operations across EMEA, APAC, and the Americas. The result is that the UK has created more tech unicorns than any other country, bar the US and China, and is a world leader in terms of attracting investment. London is particularly unique being home to a global finance centre (including the London Stock Exchange), a tech centre, and a policy / regulatory centre all within a few tube stops of one another, making it an exceptional place for innovative companies to be born and thrive.”
Get in touch if you want to find out more about becoming an Adviser.
And relax.
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Shadows of Doubt