The Seven Investment Management founder calls for more UK Investment to stimulate growth
Although we have been seeing growth, and it has not just been down to the consumer, the level of overall investment in UK business is still poor. This has not been a short term issue for the UK economy, in fact it has been a strategic fault within it for some time, the banking crisis has made things worse.
Although over the years the politicians have come up with their different ideas for encouraging money in, they tend to focus on the tax breaks rather than the structural issues. Whilst VCTs, EIS and SEIS schemes are all well and good, those are all incentives rather than structural mechanisms to get money into businesses.
I have written often before of the old regional stock exchanges in the UK, although I am not advocating their return. However, the encouragement for local equity investment certainly should be there. As I travel round the country I find that there is a direct interest in investing in local businesses by local people. They know the businesses, they know the local economy and there is a level of local loyalty and enthusiasm. I am not suggesting that this is the investment answer for all, but certainly for a proportion of people’s portfolios this may well be an interesting alternative – but that can’t happen without some structure.
With the Budget coming up and the Banking Bill not too far away, here is the opportunity to try and encourage this by formalising some of the Peer to Peer ideas on a regional basis. To this I would add a tax incentive but one which encourages longer term equity investment over five to seven years, which is what smaller local businesses need. The shorter views of the Venture Capitalist and Private Equity may help but their time horizons are often too short and their ‘push for growth’ is often at any cost rather than at a more reasonable rate.
Local equity investors want to participate and have in the past shown themselves to be longer term investors – just what our burgeoning SMEs need – longer term investors not shorter term punters.
Justin Urquhart Stewart is the founder of Seven Investment Management and a regular media commentator. Originally trained as a lawyer, he has observed the retail market industry for 30 years whilst in corporate banking and stockbroking.