Discussion of a “growth agenda” for the UK has seen dividing lines drawn between backers of big business and supporters of small enterprise. We are told some Government departments want to cosy up to the big boys, while others are said to be lining up behind the small enterprises. Who is right?
Small business – SMEs – are businesses with less than 250 employees. Delving into the figures published by the Department for Business shows that SMEs account for 6 out of 10 private sector workers. 13.6m people work for SMEs, while 9.2m work for big businesses. The graph below shows the trend. Since 1994 SMEs have become increasingly important in the employment arena, while big business employment numbers, having risen up to 2001-2002, have since fallen back towards 9m:
What about the money? Big business may account for only 4 out of 10 private sector jobs, but is responsible for just over half of private sector turnover. In the turnover stakes, SMEs and big business have been pretty much tied over the last decade and a half:
What then are the implications when it comes to planning the future growth of the UK economy? First, SMEs really matter. They account for most of the UK’s private sector jobs. They are responsible for half of the UK’s private sector turnover. And it can be seen from the jobs graph that SMEs have so far shown resilience in the face of the downturn. When it comes to increasing the structural growth rate of the UK, SMEs have a central role to play.