Small and medium sized enterprises (SMEs) have driven more than 70 per cent of private sector employment growth in the UK since 2011, new research out today by npower Business and Capital Economics reveals, and now employ a stunning 15.7 million people nationally. This represents almost 50 per cent of the entire working population in the UK.
Office of National Statistics (ONS) figures this month showed that the nation’s employment rate is the highest since records began in 1971 – with 31.95 million people now in work.
Richard Longbottom, head of npower Business, says, ‘The UK’s entrepreneurial spirit is clearly flourishing. There are now almost 5.6 million SMEs in the country. These innovative, industrious businesses have created jobs for 1.8 million people in the past five years alone. We’re dedicated to helping SMEs thrive and are delighted to see this trend.’
The top performing SME sectors in just seven cities – Birmingham, the City of London, Hull, Leeds, Liverpool, Manchester and Newcastle – will create a total of 25,000 jobs by 2021, adding around £1.2 billion to the economy, the research finds.
SME growth is being driven by a number of sectors. These include film and TV production, machinery repair, and healthcare. At the city level, other hot sectors were mobile food services, education support and healthcare activities.
SMEs across the country are also reducing their debt; the amount of outstanding loans to SMEs fell to £166 billion at the end of 2016, from close to £200 billion in 2011. Growth will remain resilient despite Brexit uncertainties resulting from a hung parliament, the research finds, with exporters benefiting from the fall in the pound.
The report also finds that SMEs with between two and 49 employees are more likely on average than large businesses to have employees trained to degree level.
npower Business has partnered with entrepreneur Tim Campbell, winner of the first series of BBC’s The Apprentice, to highlight the importance of these businesses to the UK’s economy. He says, ‘SMEs are fundamental to Britain’s economy. Not only do they inject a substantial amount of money into local economies, they create significant jobs throughout Britain.
‘Throughout my career, I have witnessed many remarkable SMEs grow into new markets before going on to flourish and prosper. Their capabilities should be recognised and celebrated. So I’m thrilled to be working with npower Business to get SMEs the recognition that they deserve.’
npower Business is dedicated to helping UK SMEs better understand and manage energy by reducing their energy costs and improving their bottom lines. It looks after the energy needs of over 170,000 SME customers across the country.
Seven Cities highlighted
Birmingham: The number of SMEs has increased by 32 per cent since 2010, creating over 27,000 new jobs. There is a high concentration of SMEs in the freight and jewellery manufacturing sector. Future growth will be led by mobile food services generating an additional £16 million in value added by 2021 and providing a further 800 jobs to the local economy.
City of London: The number of SMEs has increased by 41 per cent in the City of London since 2010, creating 85,000 jobs. The largest SME sectors in London relative to the national average are financial and professional services including monetary intermediation, trusts, insurance and legal activities. Future growth will be led by management consultancy, generating an additional £255 million and 3,000 jobs.
Hull: The number of SMEs has increased by 14 per cent since 2010, creating around 3,400 jobs. The largest SME sector in Hull relative to the national average is printing and reproduction of recorded media. Future growth will be led by temporary employment agencies, along with health sector activities, with the former alone supporting £11 million in gross value added by 2021.
Leeds: The number of SMEs has increased by 30 per cent in Leeds since 2010, creating 30,000 new jobs. The largest SME sectors in Leeds relative to the national average include the legal sector, residential nursing care, postal and courier activities. Future growth will be led by education support, which will generate an additional £21 million in gross value added by 2021.
Liverpool: In Liverpool, the number of SMEs has increased by 27 per cent since 2010 creating 4,500 jobs. The largest SME sectors in Liverpool relative to the national average include legal activities, retail and back office support for insurance and pension funding activities. Future growth will be led by SMEs providing mobile food services, supporting an additional £7 million in gross value added by 2021 and providing 400 extra jobs.
Manchester: The number of SMEs has increased by an impressive 51 per cent since 2010, rising to a total of 18,570. This has created 37,000 new jobs. The largest SME sectors in Manchester relative to the national average include clothing manufacture and legal activities. Future growth will be led by restaurant and mobile food services, supporting an additional £17 million in gross value added by 2021 and 900 jobs.
Newcastle: The number of SMEs has increased by 24 per cent since 2010, to around 7,500 SMEs, creating nearly 10,000 jobs. Relative to national averages, Newcastle has a high concentration of SMEs in legal activities, which is twice the size, relative to the entire Newcastle economy as it is nationally to the national economy. Future growth will be led by SMEs providing health services other than those undertaken in hospitals, generating an additional £10 million in gross value added by 2021.