The UK economy is missing out on a vital boost as new research reveals small-and-medium sized businesses (SME) are sitting on £86 billion of dormant cash in current accounts paying little or no interest.
Shawbrook Bank’s inaugural SME Savings Monitor reveals this is also causing smaller firms to miss out on billions of pounds in interest.
The research found that SMEs, which make up 99.9% of the UK’s 5.9 million firms, need quick access to 31% of their total cash reserves to cover the cost of day-to-day operations.
However, SMEs are actually holding an average of 57% of their total capital in current or instant-access accounts, rather than fixed-term deals that typically pay higher rates of interest.
Calculations carried out by the Centre for Economic and Business Research (CEBR) on behalf of Shawbrook reveal that this is causing SMEs to miss out on £4.2 billion in extra interest each year.
Shawbrook’s SME Savings Monitor provides insight into the attractiveness of the UK’s cash savings market, looking in detail at interest rates, SME savings mix, the number of new accounts opened and SME’s savings ratio. It is also supplemented by a survey of 500 senior SME decision makers to examine how small businesses perceive and behave in the cash savings market.
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