Every Wednesday, we delve into the latest fintech updates from across the UK. This week brings updates from Sonovate, the Federation of Small Businesses, UK Sustainable Investment and Finance Association, TIGA and My Pension Expert.
Cash flow problems hit contractors hard
Thirty-eight per cent of UK small and medium-sized businesses (SMEs) currently take over 90 days to pay their contract staff, according to new research from Sonovate, the embedded finance and payment solution provider.
Meanwhile, 43 per cent of UK SMEs now struggle to pay their contract workers on time as a result of cash flow problems within their businesses. In contrast, identical research conducted in summer 2022 found that, at that time, just 28 per cent of SMEs failed to pay their contractors on time.
Richard Prime, co-founder and co-CEO of Sonovate commented: “Whether it is the intensification of the ‘cost of doing business’ crisis we’ve seen in the past year, or incumbent lenders’ persistently inadequate service to the SME sector, we are still experiencing chaotic cash flow ripples across the economy.
“It is the UK’s growing army of contractors that is increasingly facing the brunt of this, having to wait over three times as long as they should have to to get paid for the services they provide. This must change, and quickly.”
FSB urges government to incentivise innovation
The Federation of Small Businesses (FSB) has urged the UK government to foster a risk-taking business culture from the bottom up by incentivising millions of small firms to invest in tech adoption and innovate.
An FSB report found that 69 per cent of small firms have introduced a new form of innovation in the last three years. This includes the development of entirely new products to their market (25 per cent), significantly improved products (38 per cent), and better staff and customer experience (25 per cent).
Two-fifths of small business owners say they don’t have time to develop new ideas to innovate their business, while 28 per cent identified affordability as a barrier and 17 per cent feel that they lack the know-how to implement changes. Around half of small firms suggested additional government grants would encourage them to innovate, and 46 per cent said extra tax relief would do so.
Tina McKenzie, policy chair at FSB, commented: “The use of technology and innovation is a major force in economic growth, which is exactly what our country needs right now. The pandemic has shown how quickly start-ups and small businesses are to move with new ideas that change the economy, often up against large incumbents. These small firms are keen to keep that legacy alive but are also facing scarcer government support.”
UKSIF urges government action to achieve Net Zero goals
The UK Sustainable Investment and Finance Association (UKSIF), led another call for the government and the UK Prime Minister; this time calling for the UK to remain steadfast to its Net Zero transition.
In a letter signed by 36 financial institutions, the finance industry warned that without long-term clarity from the government, the £50billion to £60billion per year of investment required to reach net zero won’t happen.
Seb Beloe, partner and head of research at WHEB Asset Management, the positive impact investors and one of the letter’s signatories, commented: “We stand with UKSIF and the broad range of signatories from across the finance industry in urging PM Rishi Sunak to take a long-term and holistic approach in formulating sustainable policies to tackle issues critical in combating and adapting to climate change.
“The UK is home to several companies with world-beating environmental technologies – but they need the Government’s unwavering commitment to maintain Net Zero policies.”
UK video games industry thrives despite economic pressures
As a number of sectors across the UK struggle with rapidly rising interest rates, lower rates of investment and further financial setbacks, TIGA, the trade association representing the UK video games industry, has revealed that employment in the UK’s games development sector has surged by 11.4 per cent.
Meanwhile, studio numbers have increased by almost 18 per cent. The report has also highlighted that almost 80 per cent of the UK’s games development workforce is located outside of London.
While London employs over 22 per cent of the games development workforce across 587 companies, 77 per cent of all games development staff in the UK are employed outside of the capital.
Dr Richard Wilson OBE, CEO of TIGA, commented: “The UK video games development sector is powering ahead. Employment is soaring and studios are continuing to hire at near-record rates. With high growth games studios in many regions, the sector is supporting economic growth across the UK.”
UK adults lose faith in government pension strategy
Just 25 per cent of UK adults believe the government has done a good job of helping those nearing or in retirement during the cost-of-living crisis, reveals new research by My Pension Expert.
Fifty-six per cent believe the government lacks a clear strategy for improving outcomes for UK pension planners. This comes at a time when 51 per cent of UK adults with a pension say high inflation and rising interest rates have made retirement planning a more challenging undertaking.
Lily Megson, policy director at My Pension Expert, said: “This research delivers a damning verdict on the government’s strategy for improving the prospects of UK pension planners. Further, it highlights a prevailing sense of scepticism towards the government’s ability to effectively address flaws within the current system.”