Public policy towards small firms: Spreading the jam too thinly?*

Abstract

Abstract This article considers the growing economic role and continued economic importance attached to the UK's small and medium sized enterprises (SMEs), a sector of the economy which is overlooked by commentators and economists. The rationale underlying the UK's ‘SME policy’ is outlined and placed in a European context. In particular, the authors carefully set out the arguments and evidence apparently supporting the view that small firms, in particular those currently expanding, are a key ‘economic driver’, creating jobs even during recessionary periods. As such, the SME sector deserves the emphasis currently placed upon it by the recent Conservative government as a focus of policy intervention. However, with reinterpretation of the evidence such statements are carefully dismantled and shown to be somewhat of a cliche. The authors make clear their view that policy attention has focused on the wrong areas of the economy. Emphasis on developing a small firm sector has done little to improve the UK's long...