Britain’s smallest businesses generate £868bn in annual turnover but are routinely overlooked by policymakers, according to research that calls for lower employment taxes and changes to business rates.

A study by accounting software company Xero and the Centre for Economics and Business Research (Cebr) identified 3.3mn businesses employing fewer than 10 people across 20 sectors, including construction, wholesale, transport and professional services.

Together, these businesses support 3.8mn jobs, contribute £360bn directly to UK economic output and generate an estimated £97bn annually in business taxes, according to the research.

The findings highlight the economic significance of companies that operate outside more prominent sectors such as retail and hospitality, particularly as the government prepares its Autumn Budget.

An analysis of five years of parliamentary debates found substantial differences in the attention given to industries. Rental and leasing businesses were mentioned just 26 times, compared with 5,578 references to hospitality and catering.

Wholesale trade received 170 mentions despite microbusinesses in the sector generating almost £118bn in annual turnover.

Xero argued that this lack of visibility risked leaving smaller employers disproportionately exposed to tax changes and poorly targeted business support.

“A huge portion of our economy often gets ignored, and it’s not okay,” said Kate Hayward, Xero’s UK managing director.

“When millions of businesses are missing from the conversation, we make decisions from an incomplete picture and these businesses carry the cost.”

The company called for reductions in employer national insurance contributions for the smallest firms, an increase in the Employment Allowance and temporary tax credits for businesses creating additional jobs.

It also proposed raising the threshold for full Small Business Rate Relief in England from a rateable value of £12,000 to £25,000, alongside changes to the system of business rates multipliers.

The research found that microbusinesses make a substantial contribution to regional economies. In London, the businesses identified generated more than £183bn in turnover and supported 747,000 jobs. Greater Manchester accounted for £35bn in turnover and 178,000 jobs.

Cebr estimated that every £1 of direct economic output generated by these businesses supported a further 74p elsewhere in the economy through supply chains and household spending.

Including these wider effects, the researchers estimated that the businesses supported 6.9mn jobs across the UK.

Xero said policies designed to reduce hiring costs and improve access to professional advice would help smaller companies expand, particularly in areas where economic growth remains weak.