There is a growing concern over the antiquated economic structure in the UK whereby more than 90% of the assets are controlled by big business which does little to ensure the long term social and economic prosperity of the Nation. The recent failure of the big banks has provided further evidence of this fact following the Barclay’s Libor rate fixing scandal, failure to promote lending to small businesses, the relaxation of money laundering procedures at HSBC and concerns over excessive pay at Barclays.
The concentration of wealth in the UK is much greater than on Germany and the gap continues to widen. It is suggested that a key factor behind this is that 40% of the German economy is owned by co-operatives and family businesses, leaving a fairer distribution of wealth and opportunity.
The challenge for the UK economy is to restart growth and this can be achieved by introducing new policies to promote diversity in the business models. Ownership should not be centralised to a few big businesses. The recent policy of low interest rates backed by Quantitative Easing has not worked. The government would be better placed to provide support to Small and Medium Sized Enterprises (SME’s) and family businesses. These models have proved successful in the past and are more likely to stimulate growth.
Additional support is required from the banking system in order for this model to be successful. Small businesses are having difficulty in raising the necessary finance to deliver the growth required to stimulate the UK economy. The opening up of the banking system to new competition is positive and the recent move by M&S into banking is most welcome as is the acquisition of 632 Lloyds branches by the Co-operative bank. Perhaps the increased competition will encourage the necessary lending to SME’s.