U.K.’s Small Businesses Expose Racial Equality Gap in Covid Era

U.K. businesses owned by ethnic minorities risk missing out on the post-pandemic economic rebound, exacerbating existing inequalities that were exposed by the coronavirus.

A survey by the British Business Bank in October found 61% of Asian and other minority-owned enterprises had paused or permanently stopped work because of Covid-19. The figure was one and a half times that for White-owned businesses. Now a report published on Wednesday by the Commission on Race and Ethnic Disparities said they were less likely to seek business funding because of “perceptions of a systemic disadvantage.”

The pandemic already exposed the inequality in death rates and infections among ethnic minorities in the U.K., and also now the rate of vaccinations. But less attention has been given to the disproportionate effect on businesses in those communities.

As the government extends aid to foster the recovery as lockdown measures are eased, the risk is that it leaves them in a weaker position to take advantage when customers start spending again.

“Ethnic minority businesses are overrepresented in sectors that have been most adversely affected, including hospitality and retail yet they are often detached from the formal networks of support and guidance that can make such a difference to their survival prospects,” the Federation of Small Businesses said on Wednesday. “This is why we think ethnic minority entrepreneurs are important to a post Covid-19 recovery program.”

U.K.’s Small Businesses Expose Racial Equality Gap in Covid Era

Take Brick Lane, home to a predominantly Bangladeshi community whose curry houses made it one of London’s most culturally iconic streets.

Guljar Khan, owner of four restaurants and chairman of the Brick Lane Bangla Restaurant Association, didn’t initially think his businesses could survive past the New Year. Now his dilemma is how to make enough of a profit to pay back his Covid-19 related debts and keep his businesses afloat. His issue is whether his eateries will make enough money once they reopen to repay any loan he might take. “It’s a big question on my side,” said Khan.

About 250,000 firms in the U.K. were ethnic minority-led, generating about 25 billion pounds ($34.4 billion) of gross value added to the economy in 2018, the equivalent of the city of Manchester, according to Commission on Race and Ethnic Disparities, a government-appointed group set up in the wake of the Black Lives Matter protests last year.

It found a barrier of communication between minority groups and banks, dissuading some future or existing business owners to seek help. “Many aren’t engaging and feel discouraged in seeking finance due to a fear of rejection,” it said, blaming perceptions rather than discrimination by lenders.

Halima Begum, chief executive of race equality think-tank the Runnymede Trust, said the government needs to be more proactive in targeting support.

“I worry that without putting in additional support, additional social safety nets, additional economic measures, how are ethnic minority business owners going to catch up with the rest of the population?” she said.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.