‘Forgotten army’ needs support
James Morter, Partner, Grant Thornton in Bristol, argues that the forgotten army of mid-sized businesses need support in order to re-vitalise the regions.
Among the UK’s mid-sized businesses (MSBs), a quiet, well-founded optimism is returning.
In the past five years these mid-tier companies – those generally employing 50-500 people – have expanded by more than 5 per cent, outperforming both small and large companies and contributing £270 billion to the economy in 2012.
The CBI is right to call them the “forgotten army” of our economic recovery, taking more risks and proving more resilient than other types of firms.
So, while the Government has tended to focus on helping smaller businesses and rebuilding the banking sector, it is actually the dynamism of these mid-market organisations that is creating growth throughout Britain.
Economy returns to better health
As the economy returns to better health, we believe government needs to recognise more visibly the power of MSBs – and that MSBs need to demand much more from government.
In turn, our mid-sized companies need to do more to match their ‘Mittelstand’ counterparts in Germany.
Germany’s MSBs have focused on working closely with government and regulators, as well as accessing long-term sources of finance, reaping the rewards of significant job creation.
Around 124,000 additional jobs were created by British MSBs over the course of 2012 and our recent poll indicates that 81 per cent of them are looking to grow their workforce over the next 12 months.
Need to emulate Germany
This is good news, but if Britain could emulate the Mittelstand’s influence it would create tens of thousands of additional jobs.
Despite the MSB sector’s massive contribution to our collective prosperity, only 33 per cent of those we recently surveyed identify themselves in this category of business and feel no affiliation to it.
Much more work is needed to co-ordinate these dynamic organisations and help them to feel part of a shared entity.
London leads the charge
Our own Agents of Growth analysis of MSBs has reinforced the fact that London leads the charge in this sector, increasing turnover between 2011 and 2013 by £19.5 billion.
While the capital will always be a powerful engine within the UK economy, focusing policy, incentives and investment on the regions is important in order to diversify our economy and ensure growth and jobs are spread across the country.
Transport integration is an area which could create more growth in a city such as Bristol, and during a series of round tables we conducted earlier in the year with MSBs, company bosses said that integrated transport, together with flexibility on fuel duty, are areas where they’d like to see government action.
Emphasis was also placed on overseas trade by business. Easing the process for export licences, expanding access to export credit guarantees and streamlining business visas were common demands from business leaders we spoke to.
Mid-sized tech firms are also competing with global brands for talent; reassuring private businesses that they can legitimately set up share ownership schemes without a change in sentiment from government will enable these firms to entice talent through attractive packages beyond salary.
While city-level policies are vital, a wide-ranging set of measures for bolstering MSBs’ performance is still needed to re-balance the British economy.