Importance Of Smes On The Uk Economy Essays

Importance Of Smes On The Uk Economy Essays

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In the Twenty-First century, Small and Medium Enterprises (SMEs) is not a novel term to be heard by people. In regard to having a self-explanatory name, SMEs is used to describe businesses that are small or medium in size; which is understood further by the set features of hiring up to 250 employees, receiving up to £50 million turnover every year as well as having internally autonomous management system and decision making (Analoui & Karami 2003, p. 27). According to the Department for Business Innovation & Skills (2015, p. 9), the number of SMEs in the United Kingdom has experienced a rise of 1.9 million for the past 15 years. Consequently, this significant increase would have played huge role in the UK economy – which mainly is expected to be positive. Therefore, this essay is going to discuss about the importance of SMEs towards the UK economy. It will then be followed by details respecting the challenges that are faced by the SMEs to grow. Afterwards, discussion of several governmental policies to the SMEs and its inference will be added. Finally, the essay will be concluded by summarisation of all discussions done.

The importance of SMEs to the UK economy is linked to their part in bringing advantages to the economy. One of the importance includes their contribution to the UK economy in reducing unemployment. In a briefing paper by Rhodes (2015) and published by the House of Commons, it is disclosed that the business type in the UK is dominated by 5.4 million SMEs, which provided the enormous portion of over 99% against the total. Yet, as mentioned, their domination is not an idle number in the statistic. In 2012, a findings reported that around 367 000 people was no longer unemployed due to the SMEs each year (Urwin & Bu...

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.... Moreover, it was then discussed the challenges that are faced by SMEs to develop themselves in the UK. It was identified that SMEs were facing difficulties to obtain finance for growth. Furthermore, SMEs also considered taxation alongside the health and safety regulation to be another barring element.

Finally, government policies and their implications were examined. There are three policies studied, tax policy from the government that requires a specific amount of tax to be paid, health and safety regulation that demands employers to ensure minimisation of risk exposed to employees and even non-employees and a policy that allows SMEs to obtain alternative financial aid source after being declined by the bank they are going to. In brief conclusion for this discussion, the government seems to be providing mutualism; benefits to the SMEs, public and the government. 

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