The Government’s financial support package should remain in place until the economy has sufficiently recovered, a major regulator has warned.
The Institute of Chartered Accountants in England and Wales (ICAEW) said initiatives, such as the Coronavirus Job Retention Scheme (CJRS), have helped businesses survive throughout the pandemic.
But with major challenges remaining, the regulator has called on the Government not to unwind support “too early”.
According to the most recent data, some 55 per cent of small and medium-sized enterprises (SMEs) across Britain accessed some kind of financial support since the start of the outbreak in March last year – with non-repayable forms of support the most popular.
However, many support mechanisms – such as the Bounce Back Loans Scheme (BBLS) and the Coronavirus Interruption Loan Schemes – come in the form of debt, which, if lifted too early, could “precipitate a wave of bankruptcies that jeopardises the recovery”.
The report also reveals that the potentially most vulnerable business operations – such as smaller and younger firms, the self-employed, as well as women and minority entrepreneurs – had less access to financial support than larger organisations during the pandemic.
The data, which forms part of the OECD SME and Entrepreneurship Outlook 2021, also shows that limited access to digital technologies and high-speed broadband could endanger the recovery of businesses – meaning the Government should dedicate support to those based in the most rural regions.
Commenting on the report, the ICAEW said: “The COVID-19 pandemic has taken its toll on SMEs and entrepreneurs around the world, but even though they are weathering the storm thanks to strong government support packages, big challenges remain.”
To access the OECD report, please click here.
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