Partner Article
UK mid-market business shows promise
GE Capital have published comprehensive research into the understanding of mid-market companies.
The study, “Leading from the Middle, the untold story of British Business”, shows mid-market firms represent just 1.37% of total UK companies, but contribute 32% of private sector GDP.
Such firms also provide more than one in three UK jobs, increasing their headcount by over 25,000 through a period when large companies cut almost 700,000 jobs.
German Mid-market firms were found to be the best performing segment across the EU-4 (Italy, Germany, the UK and France), where across many indicators they even outperform large German firms.
While the research suggests that such German firms could offer a blueprint for the UK mid-market, however the CBI suggested it showed the UK was lagging.
Chief Policy Director at the CBI, Katja Hall, said: “GE Capital’s research really highlights the disparities. The UK mid-market has the second-highest proportion of ‘gazelles’ - or ‘growth champions’ - when compared to the mid-market in Germany, France and Italy, but also the second-highest proportion of flat and declining companies.
“But what GE Capital’s research also found was that UK MSBs’ principle focus is simply staying in business. Survival rather than growth is the defining strategy of 26 per cent of the companies surveyed, more than in France and Italy and almost double that of German companies.
“MSBs and exports are intrinsically linked, and we welcome the government’s moves to bolster the support they are offering to help MSBs looking expand overseas.
“It’s critical, because MSBs are our innovators and fundamental components of larger exporters’ supply chains.
“We totalled up the size of the prize last October in our report Future Champions. If the gap narrows so that there are more gazelles, as well as more slow-growing firms reaching a steady expansion rate rather than stagnating, MSBs could add £20 billion to the economy by 2020.
“That’s a lot of growth, and in a relatively short time. But we won’t achieve it if we carry on as we are. The neglected middle must become the nurtured middle.”
In total, only 17% of UK mid-market revenues come from outside of the EU, the lowest across the EU4 by a significant margin, and almost half of that for Italian mid-market firms (30%).
Professor Roper, Professor of Enterprise at Warwick Business School, and co-author of the UK report, said: “It’s encouraging to see more than two thirds of suppliers to UK mid-market firms are domestic or local, as it’s important to retain the value added this brings to the economy.
“However, we also need to encourage many of these firms to develop their global footprint to enable them to make the transition into the next phase of their growth.”
The research was carried out across Europe with four leading universities, based on a combination of multi-year business demography data spanning millions of firms across France, Germany, Italy and the UK, combined with 1,600 in depth interviews with European business leaders.
This was posted in Bdaily's Members' News section by Tom Keighley .
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