From equity to net zero: Where is the Yorkshire and the Humber finance market heading in 2023? - Sophie Dale-Black

Faced with this economic outlook, resilience will be crucial to ensure the continued success of smaller businesses. In order to achieve this, businesses will need to ensure they build a diverse business strategy, one that can account for changes to market conditions.

However, a more reserved debt market may impact the ability of smaller businesses to build resilience. Whilst the appetite from banks to provide debt finance generally decreases during periods of slow economic growth, the riskier nature of smaller businesses often means access to this kind of finance becomes more restrained.

That being said, Yorkshire and the Humber saw a resilient equity market in 2022. The Small Business Finance Markets report found that in the first three quarters of 2022, equity deals rose by 3 per cent compared to the equivalent period of 2021. Equity investment values also rose by 96 per cent, bringing £214 million into the regional economy.

Equity investment also holds many benefits in ensuring that businesses can continue sustainable growth trajectories.

This type of investment brings with it a whole team of experts in helping businesses to grow and build a more considered plan. Whilst providing crucial investment in the shorter term, it can also help businesses achieve their longer term goals, ultimately building business resilience.

Yorkshire and the Humber has also made good progress towards a greener economy, with the Small Business Finance Markets report finding that, as of 2020, the region accounted for 7 per cent of all low-carbon and renewable energy sector turnover and attracted around £129 million in equity investment between 2018 and Q3 2022.

Particularly as net zero related equity deals outperformed the wider equity finance market nationally, growing from 5 per cent of all deals in 2018 to 12 per cent in 2022, this is becoming increasingly important.

Over the next few years, we’re likely to see this increase further, presenting opportunities for smaller businesses.

A key focus for the Bank continues to be helping smaller businesses access the finance they need to succeed, whatever the stage of their development.

The part we play in increasing the diversity of finance on offer, providing smaller businesses with independent and impartial information, as well as identifying and reducing regional imbalances in access to finance will no doubt remain as crucial as ever throughout 2023.

Dr Sophie Dale-Black is UK Network Director for the North of England at the British Business Bank