LONDON--(BUSINESS WIRE)--The UK’s mid-market companies are now growing faster than those in Germany, France and Italy, according to GE Capital’s latest in-depth report on the European mid-market. The average UK mid-market company – defined as posting annual turnover of £15m-£800m – is set to grow sales by 6.1% in the next 12 months, compared to 4.8% in Germany, 3.4% in France and 3.8% in Italy. This equates to projected UK mid-market revenue growth of £133bn in the next 12 months.
In addition, over the next year an estimated 326,000 jobs are set to be created by mid-market companies in the UK compared to 150,000 in Germany, as the UK mid-market seeks to accelerate recruitment in response to increasing sales and resultant new capacity. Further, over one in three UK mid-market firms that currently have offshore activities are considering re-shoring some of them over the next three years, helping further boost UK economic growth.
Whilst the outlook for sales and workforce growth is bullish, the findings highlight an emerging skills shortage facing the mid-market. Attracting employees with the right set of skills has emerged as the principal challenge facing the UK mid-market in 2014, followed by attracting top managerial talent and retaining talented employees. This is a shift from the 2013 research, when keeping down business costs and overheads was the top challenge.
Ilaria del Beato, Chief Executive of GE Capital UK, commented: “The success of the mid-market is crucial for the UK economy. Just 1.7% of all businesses provide over one third of private sector GDP, revenues and employment. Yet whilst the mid-market is thinking bigger, it still has critical challenges to overcome, particularly as the competition for talent becomes much tougher, more so than regulation, keeping costs down, and access to finance.”
The report shows there is evidence of an emerging East-West divide amongst mid-market firms. Those companies based in the South East, London, East and East Midlands regions are significantly out-performing their counterparts in Western regions. Greater London is the UK’s best performing region, with 86% of mid-market companies reporting revenue growth in the past year. The region also has the most percentage of international sales (50%) as a link emerges between sales growth and international focus.
Lord Livingston, Minister of State for Trade and Investment, commented: “This report is very encouraging for the UK and its mid-sized businesses. I’m particularly pleased to see their entrepreneurial attitude to exports, which is critical to growth. UK Trade & Investment is continuing to support the UK’s mid-sized businesses to help them maximise their potential and tap into fast-growing overseas markets. ”
Key export-based findings from the report include:
- Seven out of 10 mid-market companies in the UK generate some sales from international markets – however these account for one third of total sales value
- Almost half (48%) of UK mid-market companies intend to expand into new markets in the next three years, compared with 40% in Germany
- UK mid-market exporters are more bullish about international sales growth than those in Italy, France or Germany, predicting an increase of 7.6% in the next 12 months
- UK mid-market firms perceive the most significant barriers to exporting to new markets as navigating local regulations, lack of local knowledge and associated costs
John Cridland, Director-General, CBI, commented: ”As the economic recovery continues to build momentum, UK mid-market firms are playing a key role in creating new jobs and markets, as well as competing on the international stage. We must build on this strong performance; addressing skills gaps and overcoming concerns around cost pressures that impact on business confidence.
Author of the report, Prof. Stephen Roper of Warwick Business School, said: “Overall UK mid-markets are happy with the current business environment, but notable regional differences persist with businesses in the South generally growing faster than those in the North. This may, in part, be explained by a stronger focus on export markets in the South. Mid-market companies in the North also have more negative perceptions of transport and broadband infrastructure. Greater export support and infrastructure investments in these areas could help to redress the growth imbalance.”
About the report
This report was authored by Professor Stephen Roper, Enterprise Research Centre, Warwick Business School and marks the third year of GE Capital and Warwick Business School’s research partnership dedicated to understanding and analysing the “mid-market.” The mid-market is a fast growing segment that represents just 1.67% of UK companies but which contribute over a third of private sector GDP, revenues & employment.
This year’s report is based on more than 4,000 C-suite and senior executive interviews across France, Italy, Germany and the UK. The UK survey is based on insights from over 1,000 boardroom interviews equating to more than 430 hours of in-depth interviews.
a. Majority (91%) of interviews conducted online with computer assisted telephone interviews (CATI) used to ‘top-up’ so as to ensure a minimum sample size of 1.000
b. Fieldwork conducted 14th March – 27th April 2014
c. Survey data weighted to ensure representativeness by region and industry
d. Designed, managed and executed by Millward Brown’s Corporate Practice, specialists in providing insight and advice on corporate reputation, stakeholder engagement and the wider business environment
To download a copy of the report, visit the GE Capital UK insights page at www.gecapital.co.uk
About Warwick Business School
Warwick Business School (WBS), located in central England, is the largest department of the University of Warwick and the UK's fastest rising business school according the Financial Times. WBS is triple- accredited by the leading global business education associations and was the first in the UK to attain this accreditation. Offering the full portfolio of business education courses, from undergraduate through to MBAs, and with a strong Doctoral Programme, WBS is the complete business school. Students at WBS currently number around 6,500, and come from 125 countries. Just under half of the faculty are non-UK, or have worked abroad. Professor Stephen Roper is Professor of Enterprise and the Director of the Enterprise Research Centre, which is an independent research centre that conducts policy relevant research on SME growth and development with the backing of £2.9 million of funding.
About GE Capital in the UK
GE Capital, one of the leading commercial finance providers in the UK, has major offices in Bristol, Manchester and the London area and focuses on providing leasing and lending solutions, from working capital and investment finance through to fleet management and equipment leasing to mid-market customers. For more information, please visit www.gecapital.co.uk
GE Capital Bank Limited, registered in England and Wales No. 02549477, registered address The Ark, 201 Talgarth Road, Hammersmith, London, W6 8BJ. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority to accept deposits. For more information, please visit www.gecapital.co.uk