The SME powerhouse: The industries driving the British economy

In a recent blog post, we discuss the phenomenon that is the Brittelstand: a name-sake to Germany’s Mittelstand: A powerhouse of SMEs driving the Germany economy through innovation, agility and long-term growth focus.

And in the UK, the same trend is fast developing. Delving into industry-specific characteristics of this growth, in Germany, Mittelstand firms often manufacture and sell niche products, and as a result, the growth of construction and manufacturing businesses surpasses that of  IT start-ups for example, as they “have less venture capital”, according to Winfred Weber, professor of management at Mannheim University of Applied Sciences.

But things in the UK appear slightly different. According to a recent study conducted by specialist challenger bank Hampshire Trust Bank, in partnership with the Centre for Economics and Business Research (CEBR), the top 30 micro sectors in the UK were studied in order to establish which are growing the most. In different to the manufacturing trend that we see in Germany at the moment, the UK study revealed that it was the service-led industries that have grown strongly over the past five years. In fact, the biggest SME industry grower at the end of 2017, was reported to be those businesses involved in Office admin and business support (76% increase from 2011 to 2017), followed closely by those occupying the Human Health Services space (50% increase from 2011), and then those businesses involved in the production of  motion picture, video, TV, sound recording and music publishing (50% increase from 2011).

Nina Skero, Head of Macroeconomics at CEBR, said: “The service industries account for around 78 per cent of UK GDP, hence it is encouraging to see that over the past five years growth in the number of SMEs has been particularly strong in these sectors. The buoyant confidence among SMEs is a further sign that these businesses will continue supporting economic growth. The UK is undergoing a period of great economic change and cultivating this optimism must be a priority.”

But the manufacturing industry is not agnostic to the growth path we’re seeing. In another Growth Tracker report compiled by Capital Economics, it was the manufacturing SMEs that greatest improvement in business conditions, displaying a higher business confidence levels than those businesses within the professional services space. Showcasing a well-above average confidence score, we are seeing the emergence of confident, independent manufacturers in the UK. In the same report, it was the SMEs in the Manufacturing space that expect their revenue growth to accelerate the most in the coming year – more so than professional services, IT & Telecoms, hospitality & transport and retail.

Just this week, we read a great article in The National, where the future of Scotland’s construction industry is discussed – reporting that it is firmly being rooted in innovation. And we couldn’t agree more. In fact, the definition of a business that finds themselves in the Mittelstand, or in fact, the Brittelstand, considers Innovation to be at the core of every strategy, every decision and every team. In this same article, Stephen Good, CEO of Construction Scotland Innovation Centre (CSIC) reports that, “Over the next five years, the industry estimates these projects will generate an addition £160m in revenue along with £7.1m in savings. They will also take 70 new products to market, create almost 240 jobs and safeguard almost 800.” That’s no small feat.

There is a change happening right in front of our eyes. And if your business is ready to take advantage of opportunity that is waiting for you – speak to us today to help you get started.

2018-04-12T10:15:49+00:00 April 12th, 2018|News, SME Growth|Comments Off on The SME powerhouse: The industries driving the British economy