Over the last few years, organisations such as the CBI have come to appreciate the growing importance of mid-sized firms to the UK economy.
This is not surprising, as those businesses with a turnover of between £10m and £300m generate around a third of total UK revenue despite making up only 0.5 per cent of the business population.
In fact, research carried out by accountancy and business advisory firm BDO shows that mid-sized firms have reported an 11 per cent increase in revenue over the last 12 months, bringing total revenues to £1.3 trillion. This is despite concerns over Brexit, a lack of investment by many mid-sized firms and increasing uncertainty over economic growth globally.
They have also grown employment at a faster rate and created more jobs than the FTSE 350 and smaller businesses (<£10million turnover) in the last year. Indeed, mid-sized firms currently employ over 7.6 million people and have created an additional half a million jobs in twelve months, an 8 per cent increase compared with the previous year.
And the sector which has shown the largest increase in employment has been financial services with a 28 per cent increase since the last year resulting in 121,000 additional jobs. This compares to a decrease of 3000 jobs (- 6 per cent) by the larger financial services firms in the FTSE 350.
More importantly, the greatest increase in the number of new jobs is not to be found in London and the South East of England but in regions such as the West Midlands and the South East of England.
However, an increasing number of commentators argue that despite their impact on the economy in terms of wealth and employment creation, politicians and policymakers are still not supportive in developing the full potential of mid-sized firms for the UK economy.
Given this, it is not surprising that BDO’s research suggests that despite their performance, mid-sized businesses in the UK are being outpaced by most of their EU rivals in terms of revenue and profit growth.
For example, German mid-sized firms have grown by 20 per cent over the same period with Italy and Spain posting 15 per cent growth rate for the sector. Only France, which has its own domestic economic issues, has experience lower growth by mid-sized firms of 9 per cent.
And whilst UK mid-sized businesses recorded a 4 per cent increase in profitability last year, Spain, Germany and Italy experienced significantly higher profit growth of 37 per cent, 30 per cent and 24 per cent respectively with only France again lagging behind the UK.
Therefore, if the UK is serious about dealing with the economic aftershocks of leaving the European Union, it must focus its efforts on developing those key parts of the economy which have the potential to make a real difference and mid-sized firms are certainly in that category.
In particular, various studies have shown that one of the key challenges facing these businesses and which impacts on their competitiveness and productivity is the lack of availability of suitably qualified staff.
Indeed, this skills gap may be the biggest growing constraint on business expansion for mid-sized firms and if they are to remain competitive, then more needs to be done to encourage greater investment by both the private and public sector into providing the skills necessary for these businesses to grow.