There exists in the UK an overlooked powerhouse of 13,000 businesses that could hold the key to driving our future productivity and growth.
Mid-market firms, which employ between 100 and 2,500 people, have over the past decade consistently grown at a faster pace than the economy as a whole.
They make up just 0.5 per cent of UK total companies but punch well above their weight; they account for more than a quarter of national turnover and more than seven million jobs nationwide.
Yet these firms do not receive the recognition they deserve. They operate in a twilight zone between exciting start-ups and big corporates, with an equally big platform.
They are brimming with the potential to drive up national prosperity, but they are too often passed over by policymakers and financial institutions. Make no mistake, though – these businesses possess transformational power.
Our research shows this group could add £35billion to the economy in the next five years and create more high-quality jobs. The ripple effect would be felt across the UK with 70 per cent of this growth occurring outside London and the South East.
A third of these businesses already export their goods and services overseas, compared with just 13 per cent of the smallest firms.
Take, for example, Bristol-based Open Bionics, which I visited a few weeks ago. The company develops 3D printed bespoke bionic arms for amputees, including Disney designs for children as young as five in the style of their favorite superheroes.
With plans to open six more clinics in the US, Open Bionics is not only improving lives with life-changing medical devices but also enhancing the UK’s reputation as a global leader in innovation.
This is precisely the kind of business that deserves support to scale up its operations further.
But these mid-market businesses need the right support. Despite their potential, they face specific challenges – they often struggle to access the skills, infrastructure, and investment they need to grow.
Regional support networks can be fragmented. For example it can take too long to move products and people relatively short distances, and delays to planning decisions can blunt expansion ambitions.
The pace of growth itself can be a problem to mid-market companies. That sounds paradoxical, but if the complexity of their business grows faster than their capacity, then it can be a headache.
Stretched leaders tell us they find themselves wearing many hats. As their business grows, they have to grapple with increased red tape and new reporting requirements.
If they expand international trade then they may need to deal with legislation in multiple jurisdictions.
There is a lack of robust data about mid-market firms which leaves them without a strong voice in government. So, when policies or legislation is produced, it fails to reflect their unique needs.
As a first step in addressing these challenges, NatWest, with the support of the Department of Business and Trade, will create a new UK Mid-Market Council, with members representing the primary sectors from across the business sphere.
This coalition of public and private sector leaders will amplify a unified voice of mid-market businesses, dismantle barriers, and champion their growth.
We’ll support this initiative with the introduction of a mid-market growth tracker in collaboration with data company S&P Global.
From January, this monthly report will provide vital data on the sentiment and growth prospects of this critical group, highlighting where they’re flourishing, how new challenges are impacting them and monitoring progress to identify where additional targeted support is needed.
This foundational work will provide the understanding and analysis which will improve policymaking. Bold and sustained action is needed if we are to unleash the potential of mid-market businesses.
Public and private sector collaboration is key to helping these businesses achieve new levels of success – benefiting our communities, our industries and the future of the UK economy.
What is good for mid-market companies is good for the UK. By investing in their success, we’re investing in a stronger, more inclusive economic future for us all.
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