Chancellor Rachel Reeves is set to announce an expansion of financial support for small and medium-sized enterprises (SMEs) in her upcoming Mansion House speech on Tuesday, in what could be one of her final major addresses before a potential change in government leadership. The measures aim to make it easier for small businesses to access funding crucial for growth.
The key feature of the plan is a £6.5 billion increase to the Growth Guarantee Scheme, which provides a 70% government guarantee on loans to SMEs. Since its launch in 2022, the scheme has helped businesses secure over £3.7 billion in financing, supporting economic activity across the UK. The British Business Bank estimates that the latest expansion could benefit approximately 33,000 firms over the next three years.
In addition to the financial uplift, the scheme will be adjusted to extend the maximum loan term from six to ten years. This change is designed to offer businesses greater flexibility in managing their repayments. Moreover, the eligibility criteria will be widened to allow firms with annual turnovers up to £54 million to apply, an increase from the previous £45 million threshold.
Reeves emphasized the importance of the measures for the wider economy, stating that small businesses are vital to regional growth and job creation. She described the reforms as the most significant step in years toward unlocking the potential of SMEs.
The speech, delivered at the annual financial and professional services dinner in London’s City area, often serves as a platform to outline government priorities for the economic and financial sectors. However, Reeves is not expected to remain Chancellor if Andy Burnham assumes the role of Prime Minister, an event that could occur as early as July 20.
The planned funding boost has drawn mixed responses. While the government presents it as a substantial move to support businesses navigating financial challenges, opposition figures have criticized it as inadequate. Richard Fuller, Shadow Chief Secretary to the Treasury, argued that the boost does little to address what he described as a financial cliff edge confronting many firms, attributing economic difficulties to Labour’s policies.
Reeves also called on Burnham to present a clear and comprehensive plan for governing Britain, indicating the significance of the upcoming leadership transition in shaping future economic policy.
The announcement reflects ongoing efforts to stimulate economic growth through support for SMEs amid broader political changes and economic uncertainties in the UK.