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SMEs to contribute £217bn to UK economy by 2020

The UK’s small and medium sized businesses (SMEs) are set to increase their added value to the economy by 11% over the next three years, fuelled by growth in administrative and professional services.

According to research carried out by Hampshire Trust Bank and the Centre for Economics and Business Research (CEBR), the UK’s thriving SME sector across the country’s top 10 cities will swell their total economic contribution to £217bn.

The figure would mark a sizeable leap from the £196bn they currently contribute to the UK economy, with particularly strong growth for businesses in the key Northern Powerhouse cities of Manchester and Leeds, which are both predicted to grow by 15%.

Similarly strong growth is predicted in Bristol, which could grow by 14% to £4.2bn, and Birmingham which could see growth of 11% to £6.49bn.

Meanwhile, SMEs on Tyneside (Newcastle and Gateshead) could increase the value they add to £5.48bn representing a 10% jump.

Mark Sismey-Durrant, Chief Executive at Hampshire Trust Bank, believes the figures emphasise how the country’s small and medium businesses act as the ‘engine room’ of the economy and that their contribution must be recognised in the upcoming Autumn Statement.

He said: ““As the government prepares for the first Autumn Statement following the decision to leave the EU, I urge them to keep the spotlight on smaller companies by creating conditions which will be support their continued growth.”

Predictably, London SMEs will still lead the way in terms of the total economic value they add to the economy, which is predicted to rise to £164bn, and in the total number of small businesses which could jump to 534,035.

However, Nina Skero at CEBR believes that the study demonstrates the positive contribution of SMEs right across the country, with growth centered not just on the capital but UK-wide.

She added: “We expect the importance of SMEs to the country’s economy to increase in the coming years and hope this research will inspire business leaders across the UK to invest in their growth strategies.”