East Anglia: GE Capital report shows region leading the way as UK mid-market firms close gap on Germany
- Credit: Archant
Mid-market firms in the UK are closing the gap on their counterparts in Germany, with those in the East of England leading the way, according to a new report.
Research published by GE Capital shows that the average UK mid-market firm – defined as businesses with annual turnover of £15million to £800m – has grown by 2.3% in the last year, compared to 2.4% in Germany, 1.7% in France and just 0.2% in Italy.
GE Capital says the figures highlight the UK mid-market sector’s relative resilience compared with the other large European economies. And in the East of England, the average rate of growth for mid-market firms last year reached 3.8% – higher than the average for Germany and better than that for any other UK region.
The UK also has a higher proportion of “Growth Champions” – firms with annual revenue growth of more than 10% – compared with the other major western European markets. These firms represent 17% of UK mid-market firms, compared with 13% in Germany, 11% in France and 13% in Italy.
The East of England has a higher proportion if “Growth Champions” than other parts of the UK and the region’s mid-market firms are also investing more than those in any other UK region.
However, the workforce of mid-market firms in the East of England has remained static, compared with growth of 67,000 across the UK sector as a whole, indicating that the region’s firms are getting more out of their existing workers.
And the rate of employment growth in the UK sector as a whole is markedly slower than that seen in Germany, with the research indicating that 80,000 people would have been taken on had Britain matched the German rate of job creation.
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However, UK firms are also the most bullish about the next 12 months, predicting 2.1% growth compared to 1.7% in Germany, 1.4% in France and 0.5% in Italy. This confidence is reflected in strong investment plans, with 87% of UK mid-market firms planning to either increase or maintain investment at existing levels over the next year.
Ilaria del Beato, chief executive of GE Capital UK, said: “Our research shows that mid-market firms really are the drivers of UK GDP and are absolutely essential to future economic prosperity.
“Increased confidence is translating into investment decisions and will hopefully start to be matched by employment growth as well.”
The author of the report, Prof Stephen Roper of Warwick Business School, said: “The UK mid-market is confident of future growth, however there are elements of the UK business ecosystem which need further attention in order for it to reach its full potential.
“A clear regional divide is evident, as firms in the South are growing at a quicker rate than Northern counterparts. This needs to be addressed to enable the rebalancing potential of the mid-market to be achieved.”
John Cridland, CBI Director-General, said: “We’ve been banging the drum for medium-sized businesses and the important role this forgotten army will play in the UK’s economic recovery.
“Though small in numbers, these firms are big on impact, punching well above their weight in terms of revenue contribution and job creation.
“To maximise their growth potential the Government must ensure they can access the skills they need by giving employers more control over the design and funding of apprenticeships, and improving access to export support schemes so they can tap into fast-growing overseas markets. This report is a timely reminder of the importance of medium-sized businesses to the UK economy.”