Research carried out by BDO shows that mid-sized businesses with turnover between £10m-£300m (which we call the economic engine) have grown employment at a faster rate, and created more jobs than the FTSE 350 and smaller businesses (<£10M) in the last year.
Despite often being overlooked and undervalued by the government, mid-sized businesses now employ 7.6 million people compared with the FTSE 350 and smaller businesses who employ 6.9 million and 1.6 million respectively.
Our analysis shows this market created an additional half a million jobs in twelve months, an 8% increase compared with the previous year.
Smaller businesses have also increased employment, with 100,000 jobs created in 12 months, an increase of 7%.
FTSE 350 businesses experienced a decrease of 1% in overall employment, totalling a reduction of 80,000 jobs.
The highest-performing sector is financial services (FS) which experienced a 28% increase in number of positions in the last year, totalling 121,000 additional jobs.
Despite this growth in mid-sized FS companies, smaller firms in the sector experienced just a 5% increase in jobs (12,000), with larger FS firms recording a reduction of 6% (-3000).
Whilst London and the South East come out on top in terms of number of employees, the fastest growing regions with regards to new jobs are the South West and West Midlands.
Turnover growth tells a similar story to employment with mid-sized businesses reporting an 11% increase over 12 months, bringing total revenues to £1.3 trillion.
In comparison, large companies (FTSE 350) have seen revenues grow at a slower rate of 9%, with smaller businesses experiencing a reduction of 7% over the same period, bringing total revenues to £139bn.
Since the 2016 referendum there has been a huge amount of economic and political uncertainty for all UK businesses. It is a relief to see that the economic engine continues to create more jobs throughout the UK and not just in London and the South East, but more still needs to be done to maintain this growth trajectory.
These high-growth, entrepreneurially spirited businesses are the lifeblood of our economy. They are often over-shadowed by the largest companies and they fail to get the same support and attention as small start-ups, despite the fact they are leading the way for growth.
Our findings continue to support our calls on the government to focus on a number of key policy areas that we believe will help the UK’s economic engine to thrive, these are outlined in our New Economy report.
Our ideas include radically simplifying the UK tax system, creating regional and sector powerhouses, tackling the UK skills gap and increasing productivity by boosting the Annual Investment Allowance, something our productive nation report demonstrates would make a significant difference to business investment.
Paul Eagland is Managing Partner at BDO.