Time for change?

The book has sought to provide an analysis of British business banking, its SME customers, and the political and economic environment within which it operates. The analysis has been set in a historical context, going back to the inception of the UK's industrial revolution spanning the end of the eighteenth century and the first part of the nineteenth. The subsequent period of industrialization and banking, running from around 1830 into the twentieth century, has also been described. Finally, the period from the early twentieth century to the present day has been examined in detail to answer the key question of the apparent lack of constructive engagement between British business banking and UK SMEs, and the associated lack of long-term investment finance provided to this key industrial sector. To provide a comparative analytical perspective, the UK historical and cultural account has been accompanied by contemporaneous comparisons of the German, French and US experience. This approach has yielded interesting insights into the derivation of contemporary twenty-first century business banking behaviours, institutional development, SME cultural behaviour, and the manifest political economy environment in the UK.

Critical of the apparent inattention of the major clearing banks to their socio-economic role as financial intermediaries, particularly in relation to SMEs, it has been argued that blame also attaches to the dominant short-term culture and behaviour of British SMEs. It has also been suggested that the operational peculiarities of the form of liberal market economy of the British state has led to inadequate interventions from government to rectify the problems faced by SMEs in seeking and obtaining long-term investment finance. This is not to suggest that various short-term interventions have not taken place, but they have not tackled the underlying deficiencies of the lack of structural engagement of the major clearing banks with the SME sector.

Many previous reports, investigations, and initiatives have failed to achieve the necessary reform to SME funding in the UK. The lack of a close relationship between British banks and British business – and particularly the small and medium-sized enterprise sector – has been remarked upon and criticized in a variety of official reports over almost 100 years.