Scotland’s mid-market companies are “overlooked” but essential to the UK economic recovery, according to new research which shows that their collective turnover has leapt 63 per cent in the last five years.
In a blueprint aimed at helping to build a balanced “new economy”, accountancy firm BDO argues that mid-sized firms are agile enough to adapt to the new economic realities – and big enough to take advantage of the opportunities offered by global growth.
But it says that they are too large to benefit from policies specifically tailored to small business.
The firm’s research, published today, suggests that mid-sized businesses in Scotland – defined as generating annual revenues of between £10 million and £300m – are a thriving area of the economy, growing collective turnover over the last five years from £32 billion to £52bn. This compares to a UK-wide increase of 55 per cent in the last five years to £1.02 trillion.
Meanwhile, overall employment among Scottish mid-sized firms has risen by 39 per cent over the period, from 220,000 in 2010 to 306,300 this year.
The Scottish mid-market accounts for an estimated 15 per cent of private sector jobs and nearly 20 per cent of all private sector turnover.
The report – Building the New Economy – outlines three key recommendations, directed at UK policymakers: the use of long-term lending trusts to encourage investment in mid-market businesses, zero VAT for supplies to exporters and reducing overseas tax barriers for UK exporters opening a new branch or subsidiary overseas.
Martin Gill, head of BDO in Scotland, said: “Now that we are on the road to recovery, it is essential that we do not repeat the mistakes of the past and perpetuate an unbalanced economy too heavily reliant on one sector or region.
“The government has started tackling the issues and plans around the Northern Powerhouse, devolving powers to cities and infrastructure investment are all very welcome but it is important that Scotland remains a part of any economic benefits.
“More can be done though, and encouraging Scotland and Britain’s mid-market has to be at the heart of government plans. Yet currently the mid-market falls into a policy and profile gap – too big to benefit from the policies aimed at small businesses and too small to get the attention lavished on FTSE firms.
“We would like to see a ‘new economy’ that harnesses the entrepreneurial spirit of UK businesses and puts the mid-market front and centre of the UK’s growth plans.”
The report comes ahead of official figures tomorrow which are expected to show the UK economy easing back, due to weaker construction and manufacturing output.
Gross domestic product (GDP) is expected to have increased by 0.6 per cent in the third quarter, falling back from strong 0.7 per cent growth in the preceding three months.