Partner Article

Banks 'failing to support innovation'

The UK’s financial system is failing to support the most innovative manufacturing companies, according to a recent survey conducted by UK manufacturers.

The EEF’s Innovation Monitor, Creating the Playing Field, shows that manufacturers have continued to increase their investment in innovation despite the recession.

However, the survey also suggests that a lack of understanding in the financial sector of how and why manufacturers invest in innovation leaves better performing companies still struggling to access the bank finance they need.

Less encouragingly, EEF’s survey showed that two fifths of companies had found it more difficult to access bank finance in the last twelve months and none had found it easier. Successful innovators, however, were 40% more likely to have more difficulty accessing bank finance than companies that struggled to generate a return from their investments in innovation.

Alan Hall, EEF Region Director, said: “It is worrying that the more innovative companies in our survey had more problems in accessing finance from banks, because it flags up ongoing, long-term problems in accessing finance. Although the government’s National Investment Corporation could be useful for a handful of growing companies, government needs to go further and meet the long-term finance needs of a wider range of innovative companies.

“Manufacturers also need to adopt a more strategic approach to innovation, for example, by collaborating more closely with suppliers to ensure that they share the same strategic vision. This will bring benefits up and down the supply chain and ensure that companies are geared up to deliver customer-focused innovation. Better management and monitoring of their activities, by developing innovation-specific metrics, would help companies build on their strengths as well as identify and address their weaknesses.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .