Does Britain need a Business Bank?

This blog post was published on September 13, 2012 at 10:45 am GMT

‘Bank’ by Caren Parmelee

There’s now a lot of talk about some kind of new business bank, with Vince Cable’s announcement this week reinforcing the Chancellor’s comments in a BBC interview at the weekend while arguably going some way beyond. Some commentators, including Anthony Hilton, are sceptical, and it will be interesting to see what SME owners and managers make of the idea – it’s also something we hope to be exploring shortly in the Quarterly Survey of Small Business in Britain. Clearly, businesses have diverse financing requirements, so while economists have frequently pointed to fairly compelling evidence that market imperfections may act as a constraint on ‘growth’ for some firms, it’s also the case that financing growth strategies is not on the radar for the vast majority. This is a highly contentious and technically complex issue, and unpicking the underlying causal factors is far from simple. However, it’s also interesting to see something like a consensus emerging, with a variety of actors, including the British Chambers of Commerce and the Labour Party publishing studies that make the case for some kind of Business Bank. Watch this space!