Britain’s growth outlook remains under pressure. The Office for Budget Responsibility recently downgraded its annual growth forecasts from 2026 onwards. Geopolitical factors, including shifts in U.S. tariff policy and continued uncertainty around trade arrangements, have added to the challenge. In response, much of the policy discussion has focused on familiar levers such as tax changes, regulatory reform, and trade policy.
But some analysts are pointing to a less-discussed issue: the UK’s collateral framework. The argument is both structural and surprisingly urgent. Britain has accumulated enormous private wealth: households hold a net worth of around £10.8 trillion, according to the Office for National Statistics. Roughly 3 million residents currently qualify as dollar millionaires, a figure UBS expects to fall sharply by decade’s end. The FTSE 100 has pushed repeatedly through record highs. On paper, the UK looks prosperous. In practice, very little of that wealth can be put to work.
The reason is a mismatch between the economy Britain has built and the financial system it still operates. Modern British wealth sits in equity portfolios, intellectual property, software, digital revenues, and data. The result is a capital markets system that systematically undervalues the assets most likely to drive 21st-century growth, and an entrepreneurial class that keeps running into the same wall.
A £65 Billion Gap
Research by Allica Bank has estimated a U.K. funding gap of up to £65 billion in SME credit that has built up over the past 25 years. SME loan rejection rates have climbed from 5–10% historically to around 40% today. The share of U.K. SMEs actively seeking external finance has collapsed from 65% in the late 1980s to just 25% between 2022 and 2024, the lowest application rate in the OECD.
Meanwhile, the U.K. carries the lowest business investment rate in the G7, with SMEs investing at roughly a third of the rate of large corporate businesses. For an economy where small and medium-sized businesses represent 60% of private-sector employment, that is a structural drag.
The irony is that the U.K. economy has moved decisively into intangible territory. In 2022, U.K. businesses invested a record £200 billion in intangible assets including software, branding, and R&D. But as the government’s own access-to-finance review has acknowledged, mainstream lending practices remain largely unable to account for the value of intellectual property or other intangible holdings when making credit decisions. The assets that matter most to a modern economy are precisely the ones the credit system is less equipped to see.
There is a window for alternative financing firms to step up here. EquitiesFirst provides liquidity to founders, entrepreneurs, and significant shareholders of listed companies by financing against their publicly traded equity holdings rather than their physical assets.
Long-term, concentrated equity positions held by founders and major shareholders are among the most liquid, continuously priced, and transparent assets in modern finance. They are far easier to value than a patent portfolio or a proprietary software platform — and yet they often remain untapped as a route to business capital.
An Alternative Model
One useful point of comparison is the U.S., where specialty finance has developed around a broader range of assets than traditional bank lending typically accommodates. In addition to real estate and fixed assets, financing structures in the U.S. commonly extend against listed equity, intellectual property, receivables, subscription revenues, and equipment leases. That wider approach has helped create additional pathways to capital, allowing some entrepreneurs and growth companies to access liquidity without relying solely on conventional lending or premature equity sales, while also offering investors exposure to differentiated, risk-adjusted opportunities.
U.K. productivity still trails the U.S. by around 20%, and business investment lags most of the G7. The macro backdrop compounds the problem: ten-year gilt yields remain historically elevated, thirty-year yields reached their highest levels since 1998 last year, and the cost of conventional financing remains punishing, often hitting SMEs hardest, since smaller firms face tougher collateral requirements and slower decision-making than their larger counterparts.
Venture capital, concentrated in London and focused primarily on technology start-ups, offers an exit route for a narrow slice of the economy. For the broader universe of established businesses with valuable but illiquid equity positions, EquitiesFirst’s equities-backed financing could offer an alternative.
The Policy Environment
To its credit, the government has begun to acknowledge the mismatch. UK regulators recently eased equity fundraising rules, allowing companies to issue shares up to 75% of their existing capital without a prospectus, up from 20%. The Enterprise Management Incentive scheme has been expanded. Consultations are underway on tax incentives for high-growth firms.
The government has said directly that it worries about Britain becoming an “incubator economy” — a place that generates start-ups but cannot retain or scale them — and the evidence bears that concern out. What has been slower to emerge is a serious policy conversation about collateral frameworks: about creating conditions where specialist financing firms like EquitiesFirst can operate at scale, where institutional capital can find its way into equity-backed lending structures, and where alternative platforms become central to the funding landscape rather than peripheral to it.
Tax incentives help. Trade deals help. But a financial system still underwriting a 1950s economy will continue to hold Britain back regardless of what else changes around it.
The Case for Modernizing
The argument is that the U.K. is constrained not by a lack of wealth but by a failure to mobilize the wealth it already has. The country’s equity markets are deep and liquid. Its founders and institutional shareholders hold concentrated positions of real value. Its regulatory environment, under the FCA, provides a credible framework for alternative lenders to operate.
What is missing is the architecture that connects those assets to the entrepreneurs and growth companies that need capital.
Britain has built an economy of ideas. It needs a financial system designed for one.
