Entrepreneurially-spirited mid-sized businesses have been the driving force behind the UK’s overseas turnover in the last five years, according to new research from accountants and advisers BDO, underlining the critical importance of these companies as the UK prepares to leave the EU.
The research reveals that mid-sized businesses have grown international turnover by 50 per cent since 2011 from £84 billion to £127 billion. This growth significantly outstrips that of UK FTSE 350 and small businesses, which in fact have fallen 14 per cent (£425 billion to £366 billion) and 25 per cent (£13.9 billion to £10.4 billion) respectively.
Even throughout a volatile 2016 and with the shadow of Brexit negotiations looming, mid-sized firms remained confident and continued to grow overseas turnover; increasing overseas trade by 7 per cent (from £119 billion to £127 billion). In comparison, the levels of overseas trade of FTSE350 and small businesses in 2016 fell 30 per cent (from £524 billion to £366 billion) and 13 per cent (from £12 billion to £10.4 billion) respectively.
To ensure that this growth continues, BDO is calling on the government to engage with and place the ‘overlooked and undervalued’ economic engine at the heart of its thinking as it prepares to invoke Article 50 later this month.
While the UK’s economic engine consists of only 30,000 UK companies (1.5 per cent of all UK companies) it contributes one third (£1.2 trillion) of all UK turnover. Yet despite driving overseas growth and making a significant contribution to domestic markets, the UK economic engine falls into a policy and profile gap: too big to benefit from government initiatives aimed at small firms but too small to win the attention that FTSE firms command from the media and policy makers.
In response, BDO has set out twenty-two policies which it thinks will put the UK’s mid-sized businesses at the centre of a ‘new economy’ which will thrive post Brexit. For example, the ‘New Economy’ report suggests introducing a VAT zero rating on supplies to companies that export once Brexit negotiations are finalised and a call for the UK government to battle hard for a variant of financial passporting as part of the Article 50 negotiations.
Paul Eagland, managing partner at BDO, says, ‘High-performing and entrepreneurially-spirited mid-sized businesses are the economic engine of UK international growth. Despite all the uncertainty of the past twelve months these companies have taken calculated investment risks and prospered.
‘The success of these businesses should not be taken for granted and, with Article 50 being invoked in two days’ time, it is crucial that the government factors the needs of these mid-sized businesses into their thinking ahead of negotiations.’