A NEW REPORT has revealed that small businesses in the United Kingdom contributed 36% of economic growth and almost two-thirds of job growth last year.
However, they make up just 1% of businesses, and number in the region of 30,000.
Research published today by economic think-tank Cebr and investment firm Octopus has revealed that these high-growth small businesses (HGSBs), which generally have a turnover of at most £20 million, created 250,000 jobs across the UK between 2012 and 2013.
They created 5,000 jobs each week.
The figures also point towards the significant impact these companies have on the local economy. Areas with fewer HGSBs are more likely to be under-performing.
CEO of Octopus Simon Rogerson said that report quantified, for the first time, the effect these businesses have on the UK economy – “they are not just the lifeblood but the lifeline to our economic growth and recovery”.
In Ireland, the situation isn’t quite the same, although similar research has not been conducted since the economy began to pick up.
Speaking to TheJournal.ie, Gerard Brady from IBEC’s economics unit said that Ireland’s SMEs have a slightly different effect on our economy.
In terms of economic growth, the figures are skewed by the sheer size of the multinationals here. They employ a significant amount of people but are few in number.
They’re also going to grow slower than young SMEs.
Brady said that going in the next few years, the emphasis needs to be on scaling up small companies.
Brady explained:
If the economy continues to grow like it is, policy should not just be about encouraging companies to start up, although obviously that’s still key and important, but there should be a focus on ensuring that small businesses can scale up and retain jobs.
He said this could allow for the development of something similar to the Germany economy, where a glut of medium-sized businesses contribute a significant amount.
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