Following concerns of a vague long-term growth plan on behalf of the current government, Jeremy Hunt has announced and identified the opportunities he refers to as ‘the growth sectors which will define the century’. The announcement is Hunt’s first big economic speech for the year, which sets the government’s ambitions to grow various sectors throughout the UK. The Chancellor layed out a four-pillar plan described as the ‘four E’s’ to boost economic growth and prosperity: “enterprise, education, employment, everywhere”.
However, Claire Trachet, CEO/Founder of business advisory, Trachet, argues that the growth plans fall short in scope when mapping out a succesful “Scale-up Britain” as layed out by Grant Shapps in Davos earlier this month. Although the UK remains an attractive hub for startups and scaleups due to its strong financial services sector – which employs roughly 1.1m people and generates 7% of the country’s economic output – too often, when it comes to scaling promising startups into domestic heavyweights, equity capital dries up along the way.
A clear example of this is the recent downfall of the UK’s first EV battery production plant – Britishvolt. As the UK bids to compete in the global EV market, plans to build the gigafactory fell through as the company entered administration after missing the mark on the £100 million grant offered by the Automotive Transformation Fund. Former CEO of Britishvolt, Orral Nadjari, stated that the company could have been saved if it was given just one-third of the £100 million they were promised by former Prime Minister Boris Johnson.
Trachet highlights that only 23% of British startups successfully scaled within their first five years, with just 52 of these businesses exiting the private market – either through lucrative M&A deals or IPOs. In order for “Scale-up Britain” to become a reality, these figures must improve as just four companies progressed from seed stage through to IPO since 2017.
Claire Trachet, CEO and Founder of Trachet, comments on the government’s growth plans and the future for scale-ups in 2023:
“Even though there is great potential for a positive economic outlook in 2023, seen through a growing stock market and GDP growth, there remains a lot to be done for the UK to fully recover economically. Currently, the government’s plans remain slightly vague, with no pinpoints of how the plans will effectively help startups in these sectors achieve growth.
“In regards to companies like Britishvolt, their failure to scale is a clear indication of a need for further support to retain the UK’s place as a scale-up powerhouse contender. Without this support, the UK risks losing investor confidence for big projects. In order for these scale-ups to succeed, there needs to be a clear plan that outlines how to achieve growth effectively. “
