Mid-sized businesses key to the UK’s economic recovery, with seven in 10 expressing optimism for next 12 months

RSA Group

Date:

  • Gross value added (GVA) from mid-sized businesses grew by nearly 40% between 2009 and 2019, before dipping slightly in 2020. GVA from mid-sized businesses is also expected to have grown in both 2021 and 2022
  • Despite their importance, a quarter (25%) of mid-sized businesses say government support and finance are not sufficient to help their business grow
  • RSA partners with investor and entrepreneur Steven Bartlett to highlight the importance of mid-sized businesses to the wider UK economic recovery

London 24 November 2022 - A new report, The Mighty Middle Marketreleased today from RSA Insurance, in partnership with the Centre for Business and Economic Research (Cebr) reveals that mid-sized businesses* offer a beacon of hope for the British economy, with this sector having a critical role in driving stability and growth.

The report shows that 71% of mid-sized businesses are positive about their outlook despite the current economic environment. Compared to small businesses, mid-sized businesses are also more likely to have exceeded their targets in the last year (32% compared to 45%, respectively), further demonstrating their importance as a valuable powerhouse of growth, employment opportunities and tax receipts at a time of great economic challenge.

Mid-sized businesses are key to success but are the unsung hero of the British economy

 

The number of mid-sized businesses has been growing every year since 2010 and consistently delivers disproportionately in terms of economic contribution relative to their size, accounting for around 1.5% of all businesses but 13.1% of employment in 2022.

Despite this, the report reveals that society often overlooks this business cohort in favour of smaller businesses or larger corporates. Analysis of online conversations over the past 12 months sheds light on this issue, with small businesses enjoying 60 times more mentions in the news and on social media channels than mid-sized businesses.

An economic powerhouse, but facing challenges

 

Whilst there is no doubt that mid-sized businesses are remarkably resilient, contributing £ 220 billion of gross value added (GVA) in 2019, the current economic climate is going to be challenging for them too.

Though not uniform in their characteristics, there are some key concerns that mid-sized businesses share. The Mighty Middle Market report reveals that 38% cite energy costs as one of their biggest challenges, 27% say rising labour costs and one in four (25%) say the impact of the cost-of-living crisis on customer demand is a key concern.

Mid-sized businesses are also more likely than small businesses to view research and development (R&D), and talent retention and acquisition as priorities. Furthermore, the report notes that talent and R&D funding are two areas where mid-sized businesses would like to see more government support.

Conditions for success

 

Despite the critical importance of mid-sized businesses for the UK economy, the report finds that currently, government policies are not meeting or addressing mid-sized businesses’ specific needs – more than one in eight (13%) reported they were not aware of any existing government support packages.

Of those who are aware, the support is still not adequate. A quarter (25%) say that government support and finance are not sufficient and nearly one in ten (9.5%) decided not to apply for a support programme because it did not address their needs.

However, overall mid-sized business owners are still more likely to use government support than smaller business owners. The most well-known support schemes among mid-sized businesses are tax credits (41%) and the Help to Grow scheme (31%).

Nina Skero, Chief Executive at Cebr said:

“Though mid-sized businesses account for only a small share of all businesses, they contribute significantly to the economy in terms of value-added, turnover, and employment. Given this disproportionate impact, the ability of mid-sized businesses to ride out current headwinds will be one factor influencing the performance of the UK economy over the coming year.

“Our research has also shown that mid-sized businesses diverge from small businesses in a number of respects, particularly when considering the supply side. For instance, while 27% of mid-sized businesses see rising labour costs as a challenge, this was the case for just 16% of small businesses.”

To highlight the significance of this sector of the economy, RSA has partnered with entrepreneur Steven Bartlett to champion mid-sized businesses and prioritise their needs. RSA calls on government and society to value mid-sized businesses as a cornerstone of the UK economy to help the economy build back better and stronger.

Steven Bartlett, entrepreneur said:

“As a founder myself and someone who works with a lot of mid-sized businesses, I know how tough it is to scale a business, working through those pivotal growing pains. It takes hard work, dedication, and great leadership. We cannot underestimate the value of mid-sized businesses to our economy, but they need the right support to reach their full potential. This study highlights how we need to recognise their significant contribution to the UK economy and deliver on policies and support that will help accelerate growth.”

Lee Mooney, Managing Director, Commercial Lines, RSA UK & I said:

“Despite the toughest of trading conditions in recent years – from a changing relationship with the European Union, the pandemic, supply chain pressures and now an ongoing energy crisis – UK mid-sized businesses are proving remarkably resilient. As the backbone of the British economy, we want to see them thrive with the correct support. If the UK is to come out of the current economic turmoil in better shape, then it will need this country’s mid-sized businesses to succeed.”

Read the full The Mighty Middle Market report.

 

ENDS

Notes to editors

About the Research

Cebr conducted research into the mid-sized business landscape in October 2022. This involved desk research and analysis of official data sources, such as the Office for National Statistics and Nomis. In addition, a bespoke survey of decision-makers at UK businesses was commissioned with Sapio Research. This covered a representative sample of 250 small businesses and a representative sample of 250 mid-sized businesses, allowing for comparisons to be made across these subgroups.

*The terminology of mid-sized business has been defined as businesses with 50 to 250 employees. 

About RSA Insurance  

RSA Insurance is a multinational insurance group. We are one of the world’s oldest general insurers, providing peace of mind to individuals and protecting small businesses and large organisations from uncertainty. We use our capabilities to anticipate and improve outcomes for customers via our direct channel, our broker relationships or partner organisations. We have established businesses in the UK, Ireland and continental Europe. 

In 2021, the former RSA Group Plc came under new ownership and is now a wholly-owned subsidiary of Intact Financial Corporation. 

About Cebr

Cebr – the Centre for Economics and Business Research – is an independent economics consultancy, specialising in economic impact assessment, macroeconomic forecasting and thought leadership. As a recognised independent forecasting house, our top-line predictions for the United Kingdom are published by the Treasury and monitored by a range of other economic stakeholders. For over 25 years, Cebr has combined robust economic analysis with a solid understanding of how to present insights in a meaningful, clear way.