The autumn of 2018 marks a decade since the full impact of the global financial crisis began to be apparent on the real economy in the UK. The following two years led to significant pressure on a number of key relationships in the UK economy, including the stakeholders in the market to supply external funding to SMEs (particularly between banks and their SME customers). As part of efforts to rebuild relationships and support economic recovery the Business Finance Taskforce was set up in 2010 and a number of actions and initiatives followed. This work continued at pace until 2014/15 and indeed a number of the key initiatives are fully operational now. UK supply of external funds to SMEs also rose sharply during a period of economic recovery.

In the last year economic growth has slowed and it is commonly understood that the UK economy faces a degree of uncertainty in the run up to and through Brexit. In an effort to ensure the external funding market for UK SMEs does not get damaged during this period of uncertainty, this report has been compiled to look at recent developments and future trends. The report also identifies a number of areas of future work for the UK finance sector and others in the enterprise stakeholder community to improve the health of the external funding market for SMEs which, in turn, will support UK economic growth.

The approach taken in this report is to look at the changing climate for SME external funding since the recession and then look forward to a period in the mid-2020s. The emphasis is on structural market developments and trends. In contrast, short-term market developments receive less detailed attention.