England leads SME boom
The UK now has the most SMEs in business since before the downturn after two successive years of growth. Following the loss of 80,615 small businesses between 2008 and 2011, SME numbers have swelled by 4.2% in the last two years compared with a 3.3% rise among large employers.
The monitor put England ahead with 4.6% SME population growth since 2011 followed by Scotland on 4.5%. In both cases the revival of small business fortunes has outstripped larger businesses whose numbers have grown by 3.3% and 3.9% respectively.
In contrast, Wales has experienced just 0.3% SME growth in the last two years ( compared to 5.5% for large employers). Small business numbers in Northern Ireland have fallen by -1.9%, while its big business population has shrunk even further (-2.5%).
Adam Tyler, chief executive of the NACFB, said: “SMEs are the stalwarts of the economic recovery: they have made the early running and played a vital role in brightening the UK’s future prospects.
“By fuelling activity in greater numbers across the majority of UK industries they have helped rebuild a strong foundation for further growth. This not only opens up more jobs but also boosts those larger employers who count SMEs in their supply chain or rely on the essential services they provide.
“Uneven growth across the British Isles still shows more work needs to be done to support the revival of small business fortunes. SMEs in England and Scotland have benefitted from innovative business lending which has increased the mix of commercial finance available to entrepreneurs.
“Commercial brokers can often unlock new routes to funding on a local level and a renewed commitment from lenders in Wales and Northern Ireland can satisfy regional appetite for investment to kick-start their SME recovery.”
Despite the positive two year figures – and increasingly upbeat reports on the future of the economy – NACFB analysis showed the growth of the UK business population slowed between 2012 and 2013, with a greater impact on SMEs than large employers.
While big business numbers maintained a consistent annual growth (1.7% in 2012 and 1.6% in 2013) the yearly rate of SME expansion fell from 3.3% to 0.9%: a slowdown mirrored across the UK.
England’s SMEs visibly outgrew big businesses in number during 2012 (3.5% vs. 2.2%) but were pegged back to 1.1% growth in 2013: the same rate achieved by large employers.
The yearly growth of Scotland’s SME population also slowed during 2013 and fell behind in Wales for the first time since 2011, while Northern Ireland saw a sixth year of SME decline.
In contrast, big business numbers in Scotland, Wales and Northern Ireland each bucked the overall UK trend for 2013 by growing at a faster annual rate than in 2012.
Tyler said: “The SME population has been the first to bounce back after the financial crisis suggesting an ability to adapt quicker than some larger businesses and respond to customers’ changing needs. But their small size also leaves them vulnerable to funding shortages, legislative change and the ebb and flow of the economy.
“As the UK recovery moves into second gear SMEs will need a further hand to sustain their early growth. There are far more funding sources available to SMEs now than before the crash – alternative finance has already stepped up its game and the revised Funding for Lending Scheme should prompt greater volumes of business lending in 2014.”