London-based private equity house IW Capital has today published an independent study of 2,000 UK consumers and investors examining their attitude towards alternative finance in the wake of interest rates reaching their lowest level in British history.
On Wednesday 3 August the Bank of England made the decision to cut interest rates from 0.5% to 0.25%, the lowest level in British history. To examine what this action has meant for Britain’s savers and investors, London-based private equity house IW Capital has today published the results of an independent, nationally representative survey of 2,000 UK consumers and investors.
The study asked whether, in light of the record-low interest rates, Britons would consider investing through the Enterprise Investment Scheme (EIS) over the coming 12 months. The research revealed that 30% of people are looking to EIS as part of their financial strategy for the year ahead – equating to 15.4 million people across the UK – while 27% of respondents said they are not. Among respondents aged 18-34, the proportion looking to use the scheme increases to 38%. The findings demonstrate the popularity of SME investment through EIS in the current climate, particularly among the younger generation of investors.
By location, Londoners were the most likely to use EIS in the next year, with 45% of respondents in the capital saying the scheme is on their radar. This is followed by the North-East and the South-East (both 30%).
However, while delivering positive results regarding uptake of the scheme, IW Capital’s research also uncovered a widespread lack of awareness and knowledge around EIS; 43% of respondents said they do not feel informed enough about the government-backed initiative to make use of it. There was an ever greater lack of awareness around EIS noted in Scotland (49%), the West Midlands (49%) and Wales (48%).
Luke Davis, CEO of IW Capital, commented on the findings of the research:
“Following closely after Britain’s vote to leave the EU, the Bank of England’s decision to cut interest rates to record lows has had an inevitable ripple-effect impacting people in every corner of the UK. This period of political and economic change makes it extremely important for savers and investors alike to evaluate the effectiveness of their financial strategy for the months and years ahead.
“IW Capital’s research demonstrates that in the current climate Britons are turning to alternative finance, specifically SME investment through EIS, which offers an attractive suite of tax-related benefits for an investor. This is great news for the UK’s collection of 5.4 million SMEs; with more than £14 billion invested through EIS since it was launched in 1993, this scheme has become a vital part of the SME finance landscape and our study shows that the future of this initiative is bright.
“But the research has also uncovered a pressing issue that must be addressed. For EIS to unlock the full potential of Britain’s entire pool of private investors, greater awareness and education is required. It is the responsibility of the Government and industry bodies to achieve this, providing investors with the information they require to make use of the scheme.”