Mid-market firms, which employ nearly a quarter of workers in the South West – could add an extra £35 billion to the UK economy by 2030 if given the right support.
That’s the message from Natwest, which has just released its first mid-market corporate report.
The bank says mid-market corporates represent just 0.5 per cent of UK companies, but employ 23 per cent of workers in the South West and 26 per cent nationally.
According to the report, mid-market corporates – firms with between 100 to 2,500 staff and turnover between £25 million and £500 million – have grown 20 per cent faster than the rest of the economy since 2014, and productivity is growing at twice the rate of SMEs or large corporates.
The bank says a one per cent growth in the segment could add £35 billion gross value add to the UK economy and £115 billion in business turnover by 2030.
But to do that, they need help in negotiating five hurdles identified by the bank:
- Insufficient access to skills – MMCs struggle to fill vacancies at every level (specialist and entry level) and the problem is getting worse;
- Infrastructure and planning restrictions – MMCs are typically more regionally based, limitations in regional infrastructure (e.g., housing, rail/bus links, grid connectivity, broadband) disproportionally affects this segment. Compounded by problems with the planning system;
- Complexity growing faster than their capacity – the level of complexity can exponentially increase as they establish new business lines, enter new markets or breach thresholds for regulation or red tape;
- Lack of self-identity and collective profile – MMCs do not self identify as a distinct segment (unlike the German Mittelstand), and therefore cannot collectively advocate for additional support and policies which would enable growth;
- Lack of data and transparency this segment loses in terms of policy support and other targeted measures as the lack of data means it is difficult for public and private sector stakeholders to understand the importance of the MMC segment to the economy and define policy and other targeted measures to support growth and productivity.
In response to those issues, Natwest and the Department of Business and Trade have announced a plan to create a new UK Mid-Market Council, with members representing the primary sectors from across the business sphere.
Members will include British Chambers of Commerce, Confederation of British Industry, and Make UK.
NatWest will launch the Mid-Market Growth tracker in January, in collaboration with S&P Global. Thought to be the first of its kind, the tracker will provide a quarterly view of sentiment across the UK mid-market, giving an ongoing view of this sector’s sentiment and growth prospects in every corner of the UK.
Faye Long, regional managing director commercial mid-market at NatWest, said: “Without question mid-market businesses play a pivotal role in the South West economy, employing nearly a quarter of the workforce.
“And with the right support and investment, they have the potential and capabilities to have an even greater impact on the region. We look forward to working with our regional partners on developing ways to better support these vital businesses.”
Business secretary Jonathan Reynolds said: “I welcome this report, which describes the vital role that mid-market corporates can play in driving economic growth.
“As these businesses scale up, they can become tomorrow’s blue-chip quoted companies with global scale and reach. I look forward to working with NatWest and the new Council to ensure that the potential of mid-market corporates is fully realised.”
