By David Owens
Corporate Services Partner
Hawsons Chartered Accountants
ACCORDING to a report by the Federation of Small Businesses (FSB), the UK’s SMEs could face a £3.6bn EU funding shortfall by 2021. The report suggests that deprived areas could be the hardest hit.
Over the past 12 months, eighty per cent of SMEs have sought business support services through schemes funded by the EU, the FSB report claims. Each year, around £3.6bn is made available from the EU dedicated to supporting small businesses in the UK. Assuming that this funding ceases after we leave Europe, the UK Government may have to find alternative ways to support businesses to help prevent an economic slowdown.
In addition to the £3.6bn shortfall, the UK Government has not committed to maintaining a regional development fund after 2021. SMEs in the UK are currently staring at a £3.6bn black hole. The Government would do well to reassure businesses that it has contingency plans to provide support when this funding comes to an end.
According to the FSB report, the Government’s plan for creating an industrial strategy that supports all regions cannot be delivered without finding new ways of developing regional economic growth.
The report also states that the businesses that are most likely to apply for EU-funded schemes are in Northern Ireland (32 per cent), Wales (26 per cent) and Yorkshire (25 per cent). 68 per cent of applicants said the EU-funding resulted in a positive impact on their business, while 64 per cent stated that it had a positive effect on the local area.
There was a strong correlation between business’s growth ambitions and their decision to apply for the EU-funding. 89 per cent of businesses that applied said they were hoping to grow their business by 20 per cent or more.
Not only does the EU-funding come to an end in 2021, but so do the current arrangements relating to Local Growth Fund spending. The report says that the regional split of future funding will be ‘maintained on the basis of need’ in the period after we leave the EU.
Within the regions where infrastructure is less developed, these funds are hugely important for businesses who may struggle to survive without them, even though the EU funding only makes up part of the UK’s business support and finance landscape.
While many of those businesses that applied said the funding had a positive effect on their business, the application process was subject to some criticism. 59 per cent of applicants were frustrated at the amount of information that was required to support an application, while 47 per cent complained about the length of the application process. 44 per cent said that the ongoing reporting requirements once the funds were granted were a further burden.
It is clear from the report that these EU-funding schemes help our SMEs a great deal. While the application process may be a bit tedious, the funds go a long way in supporting SMEs where the infrastructure might not be in place for sustainable business. The Government has a responsibility to come to some sort of arrangement with the EU regarding these funds, or find new ways to continue to provide meaningful support.
David Owens is a Corporate Services Partner at Hawsons Chartered Accountants and can be contacted on 01604 645600 and
