SMALL- AND MEDIUM-SIZED enterprises (SMEs) are set to contribute £241bn to the UK economy by 2025, new research claims.
The study by the Centre for Economics and Business Research (Cebr) and Hampshire Trust Bank, released on Thursday, predicts that SME contributions to the economy will grow by 19 per cent from 2016 to 2025.
UK SMEs currently contribute £202bn to the economy, with the vast majority of this value coming from London-based firms. The capital’s smaller businesses contributed £152bn to the economy last year and this is set to rise by 19 per cent to £181bn in 2025.
However, SMEs in Leeds and Greater Manchester are predicted to see the biggest growth over the coming years. Their economic contribution is set to rise by 26 per cent to £7bn and £17bn respectively by 2025.
Brexit-induced uncertainty has weighed on smaller firms, the research found, with 34 per cent of SMEs saying their business growth expectations had decreased following the EU referendum. This is particularly being felt in London (43 per cent), which indicates why the capital is not predicted to grow as quickly as other parts of the UK.
“This study demonstrates how SMEs are making a vital contribution to city economies across the UK,” said Nina Skero, managing economist at Cebr.
“The importance of SMEs is on the rise, therefore we hope this research will boost confidence among business leaders in the UK so they may continue to support job creation and capitalise on opportunities for growth.”
“SMEs are forecast to grow their economic contribution significantly over the longer-term, which serves as a critical reminder of the important role these businesses play in ensuring the success of the UK,” said Mark Sismey-Durrant, Chief Executive at Hampshire Trust Bank.
“We also should note from our study the lowering in confidence amongst some SMEs. If the UK is to be prosperous as we move away from the European Union, we need the government to keep the spotlight on smaller companies by creating conditions which will support their continued growth, as our research demonstrates how much we need these companies to develop and achieve their ambitions.”