So the Bank of England think that the rising number of self-employed people may slow down growth in the Economy.  They are probably right, but for reasons which the Bank and the financial regulators have created.

Self-employment grew by 8% in the last quarter and the UK is seen as the “self-employment capital of Western Europe”. Nothing new there then. Napoleon said the English were a nation of shopkeepers.

Furthermore the shopkeepers are a pretty resilient bunch who tend not to claim every state benefit they can get their hands on. They also put whatever assets they have got on the line. But what support do they get in return?

The Government has come up with a variety of ways of getting money to small businesses, via Regional Growth Funds, contributions to crowd-funders as well as the higher profile programmes such as Funding for Lending. It is easy to criticise and dismiss these schemes but they have all helped or are still helping to some degree.

Because what have the lenders done to help? Well, nothing actually. The challenger banks are doing exactly that and the crowd funders are doing their best although like many crowds they are making a lot of noise while not achieving a great deal. The high street banks on the other hand are sitting on their hands, and their cash, or rather our cash, and are not offering any real assistance to the owner managed businesses which make up the vast majority of employers.

The high street banks are encouraged, nay forced, not to lend by the pre–occupation of the Bank of England and the financial regulators with “affordability or serviceability” (abominable words, don’t you think?). And this is where the economy will slow down. On the commercial front there is great reluctance to lend to newcomers going into existing businesses (pubs, shops or investment property) unless they have experience in the sector – regardless of how the business is doing now – and resistance to lending until the applicant has two or three years’ good accounts under the belt. Start-ups are even more disadvantaged. Similarly with residential mortgages; two or three years’ accounts needed, steadily increasing profitability, good salaries and dividends shown etc. how long does that take? Particularly when one cannot boost your business on borrowed capital.

Once again the self-employed have to use their ingenuity to overcome these problems. Sadly, too many run to credit cards or borrowing from family or friends without exploring the market via a proper commercial finance broker. Doubtless the Government will come up with another scheme or two, which will help, but the high street banks show no sign of providing any helpful initiatives …. and where do most borrowers go first?