‘Brittelstand’ firms spearhead stronger growth across UK regions.
Reflecting their higher levels of growth, UK mid-market companies reported having a more positive outlook for the year ahead than their counterparts in Germany, France and Italy. In the next 12 months, UK mid-market companies expect to grow their revenues by 4.9%, equating to projected UK mid-market revenue growth of ?97.6 billion. They also plan to create an estimated 303,400 new jobs in the next 12 months, representing a 2.7% increase in their workforce compared to only 150,000 in Germany (up 1.8%). Almost half (48%) of all UK mid-market companies are aiming to increase headcount in the next twelve months, more than any other country surveyed.
Perhaps buoyed by domestic growth, GE Capital’s latest report also indicates that some UK mid-market companies are too narrowly focused on their home market and failing to grasp overseas opportunities. Although they are the most confident about prospects for their national and regional economy (62% and 61% respectively), export sentiment has almost halved year-on-year. Only 4 in 10 UK mid-market companies reported having a presence in China, lagging behind Italy, France and Germany. The main barriers cited in the survey for entering new markets were lack of local knowledge and language skills, as well as fear of existing competition in overseas markets.
Ian Wilkins, Leader, UK Commercial & Corporate Lending at GE Capital, commented: “Our research over the past four years has demonstrated the resilience and determination of mid-market companies. This year’s report further highlights their huge potential to drive a more even distribution of growth across the UK. The news is particularly good considering that mid-market companies are responsible for over a third of private sector GDP, revenues and employment. Although small in number – less than 2% of all companies – they are crucial to the success of the national and global economy.
“That said, it’s clear that there are still major challenges to overcome and with companies still crying out for more staff with the right skills to boost productivity and for access to a wider range of financing solutions to take advantage of more opportunities.”
Other key findings in this year’s report include:
· For the second year running skills challenges are foremost in the mind of most mid-market companies, with ‘finding talent with the right skill set in the local area’ and ‘retaining key/talented employees’ cited as the top two hurdles to growth
· The number of mid-market companies reporting access to finance as a problem has fallen from 35% in 2014 to just over one in four (27%) of mid-market companies. However this resulted in an estimated potential ?42 billion total lost in revenue to mid-market companies across the UK
· ‘Growth champion’ mid-market companies who achieved revenue growth of 10% or more in the past twelve months are much more likely than others to have solved any issues around skills and access to finance and be more concerned about complex regulation and market competition.
Lead author of the report, Prof. Nicos Nicolaou of Warwick Business School, said: “UK mid-market companies may be enjoying a period of ‘domestic bliss’ but they need to look further afield to secure long-term growth and keep pace with competitors from other markets.
“The benefits of being active in China are particularly clear from our analysis: the fastest-growing mid-market companies are more likely to have a presence in China. On average the UK mid-market companies who operate in China expect to generate around 13% of all their revenues in that market alone by 2020”.