Mid-sized firms ‘should be at heart of recovery’

Lisa Clampin, Lead Partner for East Anglia at BDO in Ipswich.

Lisa Clampin, Lead Partner for East Anglia at BDO in Ipswich. - Credit: Su Anderson

‘Overlooked’ mid-sized firms in the eastern region must be at the heart of Government plans to revive the UK economy, an accountancy firm says.

BDO, which has published a blueprint for a balanced economy entitled Building the New Economy, claims that despite being high-performing, mid-sized firms, or those with sales of between £10million and £300m, are “overlooked and undervalued”.

New figures reveal that the east’s mid-sized businesses are a thriving area of the regional economy, increasing turnover by nearly 68% in the last five years to £53billion.

Over the last Parliament, the mid-market outstripped the FTSE 100 in many key areas of performance, BDO said. While the FTSE 100 shrank by 3%, the UK’s mid-sized firms saw profits rise 110%, and jobs growth of the UK mid-market today is almost three times faster than that of the current FTSE 100.

The number of people employed in the region’s mid-market firms has risen by 72% from 199,500 in 2010 to 342,000 in 2015.

While it made up only 1% of UK companies in 2014/15, the UK mid-market accounts for nearly a third of all private sector turnover and one in four private sector jobs.

Mid-sized firms are agile enough to adapt to the new economic realities - and big enough to take advantage of the opportunities offered by global growth- but too small to achieve the levels of attention FTSE firms command from the media and policy makers, BDO points out

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Equally, they are too large to benefit from policies specifically tailored to small business. Hence, the UK’s mid-market remains stuck in a policy and profile gap.

The report suggests that Government should help mid-sized firms grow internationally and attract inward investment, and create regional and sector powerhouses to fuel the UK economy.

Proposals include changes to tax and investment structures to unlock mid-market potential by facilitating longer-term planning, rewarding business growth and encouraging expansion by exporters.

It suggests using Long Term Lending Trusts to encourage investment in mid-market businesses, and set VAT at zero to supplies to exporters. It says the Government should also reduce overseas tax barriers for UK exporters opening a new branch or subsidiary overseas.

Lisa Clampin, partner and head of BDO in East Anglia, said: “Now that we are on the road to recovery, it is essential that we do not repeat the mistakes of the past and perpetuate an unbalanced economy too heavily reliant on one sector or region.

The Government has started tackling the issues and plans around the Northern Powerhouse, devolving powers to cities and infrastructure investment are all very welcome.”

But more can be done, she argued.

“Encouraging the mid-market in the East of England has to be at the heart of Government plans. Yet currently the mid-market falls into a policy and profile gap.”