Business News Round Up (28/04/2025)
£90bn lending gap for small businesses ‘is holding back UK economic growth’
A report by Allica Bank, a specialist business lender, has found that a persistent credit shortfall has emerged over the past four decades, with bank lending to SMEs falling dramatically below historic trends. The study suggests that a heavy shift towards low-risk, property-backed lending has created a dysfunctional finance market, leaving many service-based businesses unable to access the funds they need to grow. According to Allica, SME lending today is £90 billion lower than if it had maintained the levels recorded between 1997 and 2004. Growth in non-bank finance has helped to close part of the gap, but a “substantial” £65 billion credit shortfall remains. One of the clearest signs of the shift is the collapse in overdraft provision for small companies. In 1998, overdrafts accounted for 31% of SME bank lending; today, they make up just 5%.
Scottish company insolvencies rise 3% year-on-year in March
In March 2025, there were 118 company insolvencies registered in Scotland, 3% higher than the number in March 2024. The total number of company insolvencies was comprised of 55 CVLs, 57 compulsory liquidations and six administrations. There were no CVAs or receivership appointments. The total insolvency rate in Scotland in the 12 months to March 2025 was 51.7 per 10,000 companies on the effective register. This was down by 1.4 from the preceding 12 months ending March 2024. Michelle Elliot, restructuring advisory partner at FRP in Glasgow, said: “These figures reflect the incredibly challenging global operating landscape, as well as the impact of diminished appetite from would-be investors. In the past, distressed companies might have been able secure fresh capital or a strategic sale to buy themselves more runway or even drive a turnaround. It’s increasingly difficult to do that today.”
Mayor Andy Burnham urges government to back major plans to rebalance infrastructure investment
Mayor of Greater Manchester Andy Burnham has called on government to back plans for a new ‘Northern Arc’ to rebalance infrastructure investment and provide a “massive boost to the national economy”. On Tuesday, he will meet with Treasury ministers to set out the Northern Arc vision, which is based on new analysis carried out by economists at Metro Dynamics. Greater Manchester has recorded the fastest growth in the UK, with average annual growth of 3.1 per cent since 2015, and the highest productivity growth of anywhere in the country. However, Burnham said that “outdated infrastructure linking our great cities risks limiting our potential”. New analysis suggests that if the untapped potential of the North West can be unleashed through new infrastructure investment, the region could help turbocharge economic output by about £90bn by 2040 – complementing the up to £78bn generated by the Oxford-Cambridge Arc by 2035.
Programme for Government ‘must close skills gap’
CBI Scotland has called on the Scottish Government to make closing the skills gap a priority in the Programme for Government, in order to boost productivity and long-term sustainable growth. In a letter to the First Minister, the business body argued that a coordinated national skills strategy and action plan with clear targets can bring together business, education and government to future-proof the workforce. Publishing its Programme for Government submission, the group stated that skills funding needs to be more closely aligned with industry training needs. Michelle Ferguson, director of CBI Scotland, said: “The First Minister must seize the opportunity in this accelerated programme to outline how the government plans to play its part in tackling the skills shortages that are holding back growth. We need to enable businesses to access and develop skilled workers who are ready to meet the challenges and opportunities ahead.”
https://www.insider.co.uk/news/programme-government-must-close-skills-35118159