‘Forgotten’ mid-sized firms ‘key to rebalancing’

The UK’s 21,500 mid-market firms remained an “employment engine” during the downturn, according to a report commissioned by GE Capital, although their performance was constrained by the financial crisis to a greater extent than their European counterparts.

If Britain’s mid-sized businesses had grown at the same rate since 2009 as their equivalents in Germany, the so called ‘Mittelstand’, 240,000 jobs would have been created , including 200,000 outside London, the research estimated. UK exports would also have been boosted by 5 per cent reports The Telegraph.

While the UK has the second largest mid-market in Europe – despite being the third largest economy – productivity per employee here is lower than in their counterparts in Germany, France or Italy, according to the report’s authors, Professor Stephen Roper of Warwick Business School and Professor Ashwin Malshe of Essec Business School.

These companies, which each have sales of between £15m and £800m, are being “held back” by a reluctance to tap overseas markets, difficulty in finding and retaining skilled workers and a declining emphasis on investing in research and product development, they said.

The report, which analysed data from across Europe, said that “if [productivity problems] could be overcome, the impact would be profound”.

The mid-sized companies’ bias towards manufacturing and the fact that the majority are based outside London means that “a mid-market growth story is also a rebalancing story”.