A report carried out by the Federation of Small Businesses (‘FSB’) has concluded that companies in the UK may struggle to survive unless the next government takes active steps to replace the billions of pounds which UK small businesses currently receive in funding from the European Union. The FSB warned that failing to replace the EU’s support would “have serious implications for small business aspirations as well as efforts to improve productivity and rebalance the economy”. EU funding schemes for business support worth £3.6 billion are due to end in 2020 and there is currently no regional development spending planned by the UK Government beyond 2021. Mike Cherry, the FSB’s national chairman, said: “This is a particularly pressing issue for the many small firms with growth ambitions and those in less economically developed regions.” The report highlights that small businesses in the north of England were most likely to apply for EU-funded schemes: of those that had received funding, the majority (68 per cent) reported that EU funding had had a positive impact on their company, while 64 per cent said it had benefited their region. Companies with ambitions to grow by more than 20 per cent were most likely to apply but the report suggested that even those businesses that did not apply profited from the economic growth the funding supported. The FSB has concluded that the Government should create a new growth fund, combining a replacement for EU funding with existing Whitehall support for local enterprise partnerships. Mr. Cherry said: “If the next government is serious about developing an industrial strategy that delivers prosperity across all areas of England, it must replace EU funding dedicated to small business support and access to finance after we leave the EU.” However, the FCB has also suggested that Brexit will provide an “unprecedented opportunity for fundamental reform” of business support: “Small businesses are clear that EU-funded support is a vital lifeline. But they’re equally clear that the process for attaining that support can be a real battle. It’s not unusual to find small firms giving up halfway through an application because forms are too long or complex, or they fear grants will be clawed back at the first sign of an admin slip. Sadly, it’s often time-poor businesses most in need that struggle in the face of this bureaucracy.” Mr. Cherry also said that local business groups must be empowered to tailor and simplify support to local requirements and ensure that all small companies are aware of the funding support available.
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