26 February 2026
The UK faces persistent challenges to growth. With the country’s tax burden and costs on business continuing to rise, the Office for Budget Responsibility recently downgraded its annual growth forecasts from 2026 onwards.[1]
And while the British government has adopted a slew of measures aimed at restarting growth, it has yet to find a winning formula. Geopolitical upheavals are also unhelpful: recent volatile tariff moves by the US related to its designs on Greenland have cast further doubt on the durability of the US-UK trade deal achieved last year.
Better trade deals will always be helpful for reviving growth and investment, but it may also be possible to unlock levers of growth from within. For many entrepreneurs, it must often appear that the UK’s financial system is still built for an economy long since disappeared.
What they need is a more diverse capital market – in the broadest sense – that has a different concept of asset value. Non-bank lending in all its forms will be particularly essential to the future of the UK economy because of its capacity to finance a broad spectrum of assets.
Equity-linked financing: an untapped resource
Even as productivity in the UK remains stuck around 20 per cent below the United States, and business investment trails most of the G7, the country’s capital markets continue to behave as if the engines of growth were still factories, warehouses and coal mines.[2]
In a national economy now driven by intellectual property, ideas and data, the misalignment is glaring.
On paper, the UK is affluent. Households have a net worth of more than £11 trillion, according to UBS, with about 2.6 million residents qualifying as dollar millionaires.[3] Meanwhile, the FTSE 100 has pushed repeatedly through new highs in recent months.
But very little of that domestic wealth can be used as collateral. Modern assets – whether equity positions, intellectual property portfolios or digital revenues – remain largely invisible to the credit system.
When dynamic companies and entrepreneurs cannot easily borrow against these assets, the costs show up everywhere – in the form of under-investment and stalled scaling.
Meanwhile, the macro backdrop is unforgiving. Ten-year gilt yields remain historically high. Thirty-year yields were at the highest levels in three decades last year.[4] Investors are demanding a premium to lend to Britain.
When high financing costs persist, it is SMEs – representing 60 per cent of private-sector employment – that are hit hardest.[5] Smaller firms have to endure tougher collateral requirements and slower decision-making than their larger cousins, especially as venture capital continues to be concentrated in London and is focused primarily on technology start-ups.
The UK has an economy rich in intangible assets, but its credit markets often still behave as though they were underwriting 1950s shipyards.
The government has recognised the need to reduce barriers to business. The expansion of the Enterprise Management Incentive scheme – a share option scheme that helps growth companies retain staff – is a worthy move. Meanwhile, UK regulators have recently eased restrictions on equity fundraising, allowing companies to issue shares up to 75% of their existing capital without needing a prospectus, up from 20%.[6]
There are also consultations under way around tax incentives for entrepreneurs and high-growth firms. The government says that “entrepreneurs are vital to the growth mission”, and notes that the country has a robust start-up system.[7] But it also acknowledges a shortfall in scale-up capital. It rightly worries that the UK may end up as an ‘incubator’ economy.
Broadening the collateral
Tax is a powerful lever to pull, but it is not the only one. The fostering of a financial system with a more enlightened view of collateral would be an important step.
In the US, specialty finance has successfully matured by lending against the kinds of assets that a contemporary economy produces, such as listed equity, IP, receivables, subscriptions and equipment leases. As a result, capital reaches entrepreneurs faster and investors receive transparent, risk-adjusted returns. Growth companies gain access to liquidity without being forced into premature equity sales.
The alternative credit landscape is not without its challenges. Modern forms of collateral remain subject to disproportionate suspicion, fuelled in part by high-profile failures such as First Brands last year.
But to condemn the entire universe because of what are usually classic cases of too much debt and not enough risk management would be foolish and short-sighted. It is not innovation that is the real threat, but bad faith actors and the mispricing of risk.
There is a limit to what is possible using traditional methods, so an innovative approach of mobilising a broader range of collateral is arguably more important than ever today.
Long-term, concentrated equity positions held by committed founders and major shareholders are among the most transparent, liquid and continuously priced assets in modern finance.
If Britain intends to mobilise the wealth it already has, financing that can tap into these kinds of assets must become mainstream. The country needs a broader, more imaginative credit architecture that brings specialist lenders, institutional capital and alternative platforms into the centre of the funding landscape.
Modernising the UK’s collateral framework will not solve every structural problem, but without it the country risks remaining a nation with much wealth that it cannot deploy. A more imaginative view of assets could help.
[1] https://obr.uk/efo/economic-and-fiscal-outlook-november-2025/
[2] https://commonslibrary.parliament.uk/research-briefings/sn02791/
[3] https://www.ubs.com/global/en/wealthmanagement/insights/global-wealth-report.html
[4] https://www.theguardian.com/business/2025/sep/02/rachel-reeves-uk-borrowing-costs-budget-bond-yields
[5] https://researchbriefings.files.parliament.uk/documents/SN06152/SN06152.pdf
[6] https://www.reuters.com/sustainability/boards-policy-regulation/britain-eases-rules-companies-raise-funds-2026-01-19/
[7] https://www.gov.uk/government/calls-for-evidence/tax-support-for-entrepreneurs-call-for-evidence
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