Concerns over UK start-ups funded by credit cards

Legal & General's CEO warns that over half of UK start-ups are funded by credit card, which is why the UK has a weak history of turning start-ups into thriving 'grown up' businesses. He adds that the UK is far too reliant on debt and suggests that more needs to be done in Britain to develop a culture of lending to small businesses. This follows our warning at the beginning of March that rising borrowings on UK credit cards are fuelling concerns of another bubble.

Legal & General boss Nigel Wilson has criticised the government over support for small businesses

Britain needs to develop a culture of lending to small businesses, an insurance boss has claimed, as it was revealed more than half of start-ups are funded by credit card.

Nigel Wilson, the boss of Legal & General, yesterday said the startling borrowing figure underlines why Britain is so bad at turning start-up firms into thriving ‘grown up’ businesses.

Wilson says the UK is too reliant on debt and it is still too difficult for firms to get funding.

He added the country has yet to develop the ‘virtuous equity culture’ of the US where entrepreneurs can more easily get access to finance to grow their business.

Banks have been criticised for not lending enough to small businesses since the financial crisis.

Despite the rise of alternative finance, such as peer-to-peer lenders, Wilson said small firms still do not have enough access to funding. L&G said it had hiked its dividend by 19 per cent to 13.4p per share after yet another bumper year.

Profits jumped 10 per cent to £1.09billion.

A national drive to enrol millions of people into work pension schemes has been a huge boost for L&G and other insurers.

Like many of its peers L&G reported falling earnings in its general insurance business as it was hit by stiff competition and the severe winter storms.

But it was boosted by the pension reforms which came into force in April last year.

Despite a 45 per cent slump in sales of individual annuities to £327million, L&G said assets run by its fund management arm jumped 8 per cent to £746billion.