Our CEO opines on a very significant, but largely unheralded, achievement in the SME sector.
The Mittelstand has long been held up as a gem sitting in the midst of the German economy. There are 44,000 mid-sized companies in Germany with the vast majority remaining in family ownership. Collectively they employ 9.2 million people.
Last week, BDO (a UK accountancy firm) produced a startling piece of research, which showed that for the first time, UK mid-sized companies have overtaken the Mittelstand both in terms of sales generated and the number of people employed. According to BDO, UK mid-sized companies generated 1.92 trillion euros of sales in 2013 against 1.78 trillion euros for German companies. The definition used for mid-sized companies was those with turnover of between £ 10 million and £300 million. There are 35,299 UK companies in this category and they employ 9.3 million people. Furthermore, BDO found that UK mid-sized companies had grown turnover by 33 per cent over the previous five years whilst the Mittelstand had grown turnover by only 12 per cent over the same period.
This is a staggering achievement for Britain and one to be celebrated. However, at the same time as our mid-sized companies generated this level of turnover growth, economic data shows that the British economy became less productive. If the productivity gains that were achieved between 2000 and 2007 had continued post the credit crunch, then the UK economy would be 15 per cent larger today. This suggests that our mid-sized companies need to invest to increase productivity if they are to continue to grow and stay ahead of German competitors.
A major obstacle to investment has been the lack of finance for small and mid-sized companies in the UK. This is where Money&Co. can help and it is anticipated that the flow of funds from Money&Co. and other similar platforms will increase dramatically over the next couple of years. This should allow UK businesses to invest and improve productivity, allowing our companies to continue to outperform European companies.