New capital requirements will hit UK small businesses hardest

NEW capital requirements will damage Britain’s growth prospects more than previously thought because of our economy’s high reliance on small businesses, analysts have claimed.

A paper released by Tim Ambler at the Adam Smith Institute says that “the losers” from higher capital requirements will be small and medium-sized businesses (SMEs).

“It is not the banks that we should worry about,” Ambler writes. “They will find ways to minimise the harm to themselves... The losers will be SMEs, the businesses that grow GDP. That really is something to worry about.”

He says that this is particularly the case should the UK adopt harsher capital surcharges than others in an attempt to counter economic cycles.