The proposal involves floating equity stakes in mid-sized companies on the stock exchange, with NHS workers, young professionals and those earning £30,000 targeted for investment. The report, published by Tory MP Bim Afolami and the Social Market Foundation, said businesses with revenues in the region of £5million to £100million would be in with the chance of receiving this investment.
The government’s equity stakes in these small and medium enterprises (SMEs) would then be floated on the stock exchange, with lower prices offered to certain sections of society.
These include NHS workers and those aged 18 to 30. Investments would be targeted at those earning less than £30,000 a year.
The investments would be made via the government’s British Business Bank, which in turn would invest money via commercial fund managers.
The report says: “British companies will be heavily over-leveraged after this crisis. That will hinder their growth afterwards. We need to give them more capital, and make sure the British people benefit from their recovery.”
Chancellor Rishi Sunak.
British businesses could be in trouble due to economic downturns.
The report sets out 10 other ideas for supporting British businesses.
These include initiatives such as making it easier for people to invest their savings in businesses.
This has the potential of injecting around £6billion into SMEs without raising capital from public or private purses.
Another call is for the Bank of England to set a nominal GDP level target.
Economies around the world are taking a hit.
Mr Afolami also called for STEM subjects to be incentivised, with debt from studying to be written off if they spend five years working in occupations with high demand.
These proposals were informed by the work of the “Unlock Britain Commission,” a group of independent advisors, business leaders and politicians, led by Mr Afolami and convened to stimulate new economic thinking as Britain seeks to recover and prosper in the wake of COVID-19.
The UK is facing its biggest downturn since the 2008 and 2009 financial crisis, with a recession looming which has been touted as being deeper than the Great Depression.
This would help return some capital to consumers, too.
Last week the ONS revealed the UK economy shrunk by 20.4 percent in April, which is the largest monthly contraction since records began in 1997.
Alongside this, more than one in four UK workers – some 8.9 million – are now on the government’s furlough scheme that allows them to receive 80% of their monthly salary up to £2,500.
Forecasters at EY have also said that the UK economy could take years to recover, and is projected to shrink by 8 percent this year.