UK middle market continues to out perform closest neighbours

SMEs are one of the main drivers of the UK economy, with small and medium enterprises generating around 60% of the country’s private sector economic activity, and employing around 15.7 million of the workforce. New analysis from BDO finds that the middle market segment continues to perform well relative to its five largest counterparts across the EU.

The middle segment of the SME market saw 3.83% higher growth than the year previous, hitting £1.25 trillion in 2016, far outpacing the growth of Germany’s middle market segment at 0.99%, which reached £1.48 trillion. Spain’s meanwhile stood at 0.63%, growing to £574 billion. In France and Italy meanwhile, growth in the sector saw mild decline at 0.01% to £1.06 trillion, and by 1.35% to £911 billion respectively.

Cause for relief?

The growth in the UK middle market appears to have, for the meantime at least, thrown off key Brexit concerns in the short-term, despite SMEs having slowed in the UK relative to overall growth across the past five years – with UK’s middle market revenues grow by 34.7% in total. However due to the recurring trend amongst competitors, the country still outperforms its rivals, with Germany at 34.6% revenue growth over the past five years, while France, Italy and Spain saw the same revenues increase by 20%, 16% and 12% respectively.

Britain’s economy also continued to dominate middle market profitability figures, as the UK saw strong growth over the past year, up 19%, to £97 billion. The next closest in terms of profitability was Germany, although growth was low at 2%, with profit at £67 billion, while French companies noted profit of £62 billion, a 25% increase for the year. Italy saw profit grow by 4.7% to £35 billion, Spain, however, saw profitability decrease by 10% for its middle market companies, at £22 billion.

Commenting on the result of the study BDO Managing partner Paul Eagland said, “The success of these businesses should not be taken for granted and with much uncertainty ahead with Brexit negotiations, advancements in technology and regulatory changes, it is crucial that the government factors the needs of these mid-sized businesses into their policy thinking.”