The “SMBs Driving Economic Recovery” report from Sage – the leader in accounting, financial, HR and payroll technology for SMBs – last week revealed that, despite ongoing economic turbulence, growth in turnover for UK SMBs is expected to outperform the growth rate for all businesses from 2023-2025, with SMBs expected to make up 51.9% of total business turnover in the UK economy by 2025.
Working with Cebr, one of the UK’s leading economics consultancies, Sage has researched eight markets globally to understand SMBs’ role in driving economic recovery, and using historic insights from the last recession in 2007-2009, predict trends up until 2025.
The report, which assesses data in the period from 2005 to 2021, including the impacts of the Global Financial Crisis, then forecasts growth trends over the next three years. Analysis predicts that the number of UK SMBs are expected to rise by 342,000 from 2022 to 2025, while emphasising the importance of SMBs across all regions in the UK. In 2022, London generated £662bn worth of SMB turnover, while in the North East, SMBs employed 67% of all business employees in the region.
Historical market analysis by Cebr also underlines the vital role of SMBs in the recovery from the 2007-2009 Global Financial Crisis and projects a similar pattern when we emerge from current economic challenges. In the UK, the number of SMBs grew by 12% between 2013 and 2015, well exceeding pre-crisis levels. The data also found that 13% and 10% of all new businesses were born during 2008 and 2009, respectively, showing that entrepreneurs were not fazed by the downturn.
Derk Bleeker, President EMEA at Sage says: “SMBs shouldn’t be underestimated in helping to recover and drive the economy as we head into the next few years. They make up 99.9% of all businesses and generated more than half (51.1%) of UK business turnover in 2022. So, while business owners are facing real challenges, they are clearly in a better position to adapt to changing economic landscapes and have the resilience to ride the storm.”
“Our ask of the government is simple; make it as easy as possible for SMBs to do business digitally and adopt technology that will unlock productivity and give them the insights to adapt and grow quicker. With the right support, policies and incentives in place, SMBs will unleash their full potential and play a vital role in economic recovery and sustained long term growth.”
Andrew Walker, Owner at Tree Tops Caravan Park says: “As a family, we have owned businesses since the 1950s and been through many challenging times, from swine fever as farmers to a global financial crisis and a pandemic. We have built our business from nothing and worked hard to weather the various storms. The fact that the number of UK SMBs are expected to increase during what will no doubt be a tough few years is a hugely positive sign for the wider small business community and really shows the resilience of SMBs. Our plan for today is to take stock and to continue to watch the business environment closely – there’s a lot to consider but it’s a great time to realign our objectives and we have ambitious plans for the future.”
FSB National Chair Martin McTague says: “The UK lost 400,000 SMBs during the pandemic and now our economy is lagging behind others due to a likely recession in 2023, anaemic growth in 2024 and EU trade barriers. This research shows the potential for growth if SMBs are supported in the right way.
“We need a new focus on economic growth and productivity because small firms rely on being able to trade seamlessly across borders. Global institutions, such as the World Trade Organisation, are becoming aware that small businesses should be central to trade policy. We need policymakers to keep the momentum going to make trade a reality for all, by supporting the introduction of Small Business Chapters as default part of trade deals and ensuring that technological solutions can be fully exploited by SMBs. Boosting trade and digitisation for SMBs across the world will help to tackle poverty, generate wealth, and support the UK economy to not just recover, but grow.”
To download the full research report, visit www.sage.com/en-gb/company/digital-newsroom/
About Sage
Sage exists to knock down barriers so everyone can thrive, starting with the millions of Small and Mid-Sized Businesses served by us, our partners and accountants. Customers trust our finance, HR and payroll software to make work and money flow. By digitising business processes and relationships with customers, suppliers, employees, banks and governments, our digital network connects SMBs, removing friction and delivering insights. Knocking down barriers also means we use our time, technology and experience to tackle digital inequality, economic inequality and the climate crisis.