SME contributions across the top 10 UK cities are forecast to hit £217 billion to the UK economy by 2020, according to a new study from Hampshire Trust Bank.
The research conducted in partnership with the Centre for Economics and Business Research (CEBR), reveals SME contributions to the economy will grow by 11 per cent from 2015 to 2020 – with businesses currently contributing £196 billion.
Leeds and Manchester are forecast to boost their value add by 15 per cent, closely followed by Bristol, which is predicted to increase by 14 per cent over the same period.
London is home to the largest number of SMEs and the capital tops the table for total SME contribution to the economy – £149 billion in 2015 rising to £164 billion by 2020, 76 per cent of the total that SMEs contribute to the UK economy.
The capital will also see the greatest increase in the number of SMEs – with the number of businesses rising from 444,880 in 2015 to more than half a million (534,035) by 2020. The study identified that growth in the capital will be driven by professional and administrative service sector businesses, which currently account for 28 per cent of total SME employment.
Across UK cities as a whole, one sector that will be driving SME growth will be professional and administrative services, such as legal and accountancy firms, with ‘wholesale and retail’ and ‘public administration, education, and health’ also playing a crucial role.
Mark Sismey-Durrant, chief executive at Hampshire Trust Bank, thinks the report demonstrates the critical importance of SMEs as the engine room of the economy.
He says, ‘Their sizeable contribution to the fortunes of the UK economy – growing to 27 per cent of total business contribution by 2020 – cannot be ignored. Our research with CEBR should be a source of optimism for the government and for employers as the strong future growth predicted suggests significant opportunity for investors, business owners and their employees.
‘As the government prepares for the first Autumn Statement following the decision to leave the EU, I urge them to keep the spotlight on smaller companies by creating conditions which will be support their continued growth.’
Managing economist at CEBR, Nina Skero, says, ‘This study demonstrates there is a positive story to be told about the UK’s SMEs and it is encouraging to see such strong growth being mirrored outside of the capital.
‘We expect the importance of SMEs to the country’s economy to increase in the coming years and hope this research will inspire business leaders across the UK to invest in their growth strategies.’