CBI Wants More Finance for MSBs
The CBI is calling for a broader range of finance to be made available to medium-sized businesses (MSBs), claiming they have the potential to inject between £20bn and £50bn into the economy by 2020.
In a report conducted with McKinsey & Co, the CBI says firms with a turnover of between £10m and £100m represent less than 1% of businesses but generate 22% of economic revenue and 16% of all jobs.
It wants the government to make bond markets more accessible to MSBs in the UK, and is calling for it to work with the financial services industry to enable more MSBs to issue bonds and use new products based on MSB bonds to attract new investors. It says the government could then kick-start demand through credit easing, using public money to back these bonds.
The CBI’s report, Future Championsalso says MSBs should be able to access a broader range of capital release equity and re-instating a Corporate Venturing Incentive to encourage large firms to invest in medium ones, and making equity investments tax deductible so that they are on a par with debt investments.
The CBI wants Entrepreneurs' Relief to be restructured to incentivise longer-term investments, according to the report, with the threshold for qualifying for the relief brought to below the current 5%.
John Cridland, CBI director-general (pictured), said: ‘To achieve extra growth, medium-sized firms must have access to new kinds of finance. This means opening UK bond markets to medium-sized businesses, encouraging use of venture capital, and making it easier for large companies to invest in medium ones, possibly in their supply chains.’
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