Britain’s small businesses can power growth, but only with a rebooted SME finance market, writes Allica Bank CEO Richard Davies

By any measure, small and medium-sized enterprises (SMEs) are the backbone of the UK economy, accounting for 60 per cent of all employment, and nearly half of all business turnover. Yet SME lending only accounts for 3-4 per cent of the UK banking sector’s £7 trillion total asset base.

Having recently conducted a detailed analysis of the available evidence on SME finance covering the last four decades, the long-term picture is stark. The UK’s position both against its own history and international comparators does not read at all well.

An underlying shift in bank lending across the UK economy that has become increasingly biased towards residential mortgage lending is clear to see.

Alongside this, SME lending has become far more focused on collateralised lending. There has been a resulting growing........

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