Smaller UK Firms Need Help to End 'Doom Loop', Think Tank Says

The UK's smaller firms face significant challenges in accessing affordable credit and investment capital, hindering their growth and competitiveness. A recent report by the Institute for Public Policy Research (IPPR) highlights the "doom loop" of underinvestment in the UK economy, with the country lagging behind other G7 nations in business investments. This article explores the impact of this investment gap on smaller UK firms and potential solutions to address the issue.


The IPPR estimates that the UK has contributed £500 billion less to business investments than other comparable wealthy countries since 2005. This underinvestment spans various sectors, including infrastructure, research and development, skills, and training. The UK ranks 27th out of 30 OECD nations in terms of investment, with only Poland, Luxembourg, and Greece investing less.

Regulatory burdens and complexity also play a significant role in preventing smaller UK firms from scaling up. According to the Federation of Small Businesses, excessive regulation and compliance costs can stifle growth and innovation. Targeted tax incentives or subsidies could encourage private sector investment in these firms, while public-private partnerships could help boost investment in smaller UK firms.


Improved skills and training opportunities can help smaller UK firms enhance productivity and innovation. However, addressing the skills gap and workforce shortages requires government policies that focus on upskilling and reskilling workers. This could involve targeted apprenticeship programs, lifelong learning initiatives, and investment in digital skills.

In conclusion, the UK's smaller firms face significant challenges in accessing investment capital and navigating regulatory complexities. To break the "doom loop" of underinvestment, the government should prioritize targeted tax incentives, public-private partnerships, and skills development initiatives. By addressing these challenges, the UK can foster a more competitive and innovative business environment, ultimately driving economic growth and prosperity.