SMEs to provide £200 billion economic boost by 2020
Small businesses are expected to contribute £217 billion to the economy by 2020, according to new research.
The Centre for Economics and Business Research (CEBR), in collaboration with Hampshire Trust Bank, released the figures, which is 11% higher than current levels.
According to the report, SMEs will deliver 27% of total business contribution by 2020, with HTB Chief Executive Mark Sismey-Durrant describing them as the “engine room of the economy”.
He added that the predicted growth should provide opportunities for businesses and investors, with a growing number of mergers and acquisitions likely.
A strong economic footing should also provide a suitable platform for smaller firms to source capital via the many alternative finance options that are available.
However, Mr Sismey-Durrant also warned that business conditions must be supportive of growth and urged the Government to use the forthcoming Autumn Statement to ensure this is the case.
The study highlights that growth is not just limited to London either, although the capital accounts for the vast majority of SME contributions to the UK economy.
Close to £149 billion was contributed to the economy by small businesses in 2015, which is expected to rise to £164 billion by 2020.
To put things in perspective, the next largest contributions came from Manchester and Birmingham, who provided £12 billion and £6 billion to the economy respectively in 2015.
Growth in these two cities is less pronounced than in the capital with Manchester expected to contribute around £1.8 billion more by 2020, while small businesses in Birmingham will provide £0.5 billion more to the economy in the same time period.
Other significant contributors to the economy in 2015 included Leeds, Tyneside (Newcastle and Gateshead), Bristol and Sheffield, who all contributed between £3.5 billion and £5.4 billion.
Growth for these regions ranged between £0.5 billion and £0.8 billion while Glasgow, Edinburgh and Cardiff completed the top ten list for SME contributions.
While the background for small businesses is a positive one, it is important that firms looking to expand do so within their means.
Corporate advisory services can aid with this process, helping to streamline the existing set-up and ensuring that a business is as efficient as possible.
By Phil Smith