Economy

Mid-sized Companies Set For Growth Spurt

The UK's mid-market business sector is set to be the fastest growing segment of the economy in the run up to 2020, according to new research.

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The UK's mid-market business sector is set to be the fastest growing segment of the economy in the run up to 2020, according to new research.

Economy

Mid-sized Companies Set For Growth Spurt

The UK's mid-market business sector is set to be the fastest growing segment of the economy in the run up to 2020, according to new research.

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International law firm Gowling WLG said the UK economy was continuing its recovery and the mid-market would increase its contribution to GDP by 18%, from £285 billion in 2015 to £335 billion in 2020.

According to the report, the small business sector’s contribution to the economy will slide from 46% of GDP at its peak in 2009 to 25% or £428 billion by 2020. But it said this fall suggests a large number of small businesses will scale up to reach mid-size status.

Large businesses have traditionally been financial engines for the UK, accounting for 48% of GDP last year (£861 billion), but Gowling WLG’s economic modelling reveals a rebalancing towards a vibrant mid-market.

A global economic slowdown looks likely to mean a gradual decline for large companies until 2019, when they will see a rebound, it said. They are forecast to increase in value by a modest 8% by 2020 to £928 billion.

Gazelles powering growth

The study, Make way for the middle, goes on to show success in the mid-market is driven by a small but rapid sub-section called ‘gazelles’. These are companies with a turnover growth of greater than 10% every year for at least five years, with sales of at least £30 million.

One of the defining features of gazelles is their international nature and focus on exports, and by 2020 these companies alone are forecast to account for £1 in every £5 of exports.

gazelles

Gazelles demonstrate consistent growth at scale

Hugh Maule, partner at Gowling WLG, said: “A remarkable shift in the dynamic of the UK economy is taking place, creating a period of exciting opportunity for mid-market companies.

“Innovative new businesses and niche sectors are springing up across the country to support regional supply chains. This is the time for mid-sized businesses to decide how they will secure future growth, and the most successful will raise capital to expand, export and reach new markets.”

Tom Thackray, CBI acting director of competitive markets, added: “Fast growth mid-market firms were the difference between recovery and recession in 2010-13. They have the potential to help rebalance our economy and bring prosperity to every corner of the UK.”

Regional hubs of innovation

Despite political focus on fostering a Northern Powerhouse, large businesses are set to decline in their share of value contribution across all regions except London, albeit modestly.

The forecast is more positive for the mid-market, which is expected to see growth rates of over 3% year-on-year in all regions except the North East, which is set to decline by nearly 1.8%.

The report uses trade data to reveal which sectors are supporting growth across the UK and shows innovative businesses scaling up in all parts of the country, from life sciences and biopharma in the Midlands, to jet engines and mid-market defence manufacturers in the South West.

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Mid-sized Companies Set For Growth Spurt

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