Insider logo The word "Insider".
US Markets Loading... H M S

Here's what the UK chancellor's 2021 budget means for fintechs

  • The UK's 2021 budget includes some key initiatives that will affect fintechs.
  • But more initiatives should follow to keep the sector flourishing.
  • Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Fintech industry. Learn more about becoming a client.

Rishi Sunak, the Chancellor of the Exchequer, presented the UK's budget for 2021 to the Parliament earlier this week. Amid an economy rocked by the coronavirus pandemic, this budget is especially important as it provides the UK with a road map to recovery.

Total VC investments in Global Fintech Hubs
UK fintechs get a boost from the government's 2021 budget.
Insider Intelligence

This year's budget has three key impacts on fintech, in terms of access to loan schemes, funding, and talent—yet the industry will need additional support to reach its full potential. For fintech, the budget is largely confirming projects, not proposing new initiatives to support the sector. It also follows the recent Kalifa Review of the UK fintech sector. As such, the government should continue to review the sector separately, and take a closer look at the recommendations made by Kalifa while it carries out the below initiatives:

  • A new loan scheme could boost business for alt lenders. The Recovery Loan Scheme will make available loans between £25,000 ($28,506) and £10 million ($11.4 million) to help businesses of all sizes through the next stage of pandemic recovery. It will replace the existing Coronavirus Business Interruption and Bounce Back Loan Schemes. While a number of alt lenders, including Starling, OakNorth and Funding Circle, were accredited to lend under the previous programs, it remains to be seen how many will be a part of the new initiative: Simon Cureton, CEO of Funding Options, has already said the Recovery Loan Scheme could see fintechs at the back of the queue, behind high-street banks.
  • A new Future Fund will help to bridge the growth capital gap. The £375 million ($427.6 million) fund will invest in innovative companies, including fintechs, that are aiming to raise at least £20 million ($22.8 million) of funding to mitigate negative impacts of the pandemic. This follows last year's £1 billion ($1.14 billion) Future Fund initiative, under which the government invested in 1,000 technology startups. The UK has a £15 billion ($17.1 billion) growth capital gap, widened by the pandemic, which makes it difficult for startups to scale, but this fund can help fill the void. While a step in the right direction, fintechs will need more dedicated funding initiatives from public and private sources alike to truly bridge the gap and scale their solutions.
  • A new fast-track visa program for the tech industry will mitigate negative Brexit impacts. Sunak confirmed a previously announced initiative to introduce fast-track technology visas for employees of UK startups. The visa scheme will allow skilled migrants with a confirmed job offer from a tech firm to bypass certain requirements that would otherwise slow the process. This follows Kalifa's recommendation that the UK should introduce a bespoke Fintech Scaleup Stream within existing visa routes such as Global Talent. The new visa program should prompt a sigh of relief across UK fintechs, as 42% of their employees come from countries abroad, which makes visa access vital—especially in light of Brexit.

Want to read more stories like this one? Here's how you can gain access:

  1. Join other Insider Intelligence clients who receive Fintech forecasts, briefings, charts, and research reports to their inboxes each day. >> Become a Client
  2. Explore related topics more in depth. >> Browse Our Coverage

Current subscribers can access the entire Insider Intelligence content archive here.

Unlock this article from Insider Intelligence!
Enter your email below to gain access to our free BII Daily newsletter that delivers a snapshot of key finance trends right to your inbox:
Email address
Note: By entering your email and clicking Continue, you agree to receive emails from Insider Intelligence, and accept our Terms of Service and Privacy Policy.
Close icon Two crossed lines that form an 'X'. It indicates a way to close an interaction, or dismiss a notification.