While the House of Commons increasingly becomes an echo chamber, thank goodness that outside of Westminster life continues for UK business and the 5.7 million small and medium-sized firms (SMEs) which form the backbone of the economy. Brexit uncertainty is a concern for many of them, but eyes remain fixated on progress and the future, not politics.
Brexit has become an immoveable impasse in public discourse, a distraction from the really important challenges and opportunities that the UK and Ireland face. Whilst the chaos prevails, business has become an afterthought for the custodians of the economic success of the country. The lack of focus on any other issue over the last three years has now put the country on an economic cliff-edge.
Last year, the UK economy grew by a mere 1.4%, down from 1.8% in 2017 – the joint weakest year for Britain since the financial crisis. Worse yet, in the final quarter of 2018, the economy contracted to just 0.2% and we saw the fastest-rising business death toll for five years. In fact, 2018 was the first year since the turn of the millennium that began with a net total of SMEs fewer than the preceding year. The first quarter of 2019 is worse.
We urgently need to take off the Brexit blinkers and turn our attention to the everyday struggles that UK business is actively confronting. Britain was the western world’s fastest-growing economy in 2015 – and there is very good reason to think it can be again, but not without action now.
Data from BGF this week maps companies with turnover between £3m-£150m for the very first time – these are high-potential businesses and we found there are 13,286 of them across the UK. This is a nationwide success story. 83% of these businesses are based outside of London – and despite the uncertainty they have experienced a combined revenue growth of £44 billion over the past three years. Businesses based in Wales, Northern Ireland and the South East have all grown their revenues at a faster pace than firms in the Capital.
Revenue growth like this, generated in such an unpredictable landscape in all corners of the UK, is a significant indicator of activity, productivity, progress, and of course potential. It shows us that there is a future beyond April, 22 May or whatever the next Brexit D-day is.
SMEs are also growing their workforces. Around 65% of these high-potential companies are actively hiring, collectively creating more than 1,000 jobs every week to add to the 2.5 million they already employ. And it’s not London, but Cornwall that sees the highest proportion of actively hiring firms, with Oxfordshire and Ayrshire not far behind. There is life outside SW1.
The narrative has been one of overwhelming negativity since June 2016 but many of these SMEs have been striving – in the face of adversity – towards progress.
What these numbers point to is what’s at risk. These firms are the creators of employment, economic growth and generate the real investment in the UK economy. In these times of change small-to-mid sized businesses are going to increasingly need help in steadying the ship and navigating the rocks that lie ahead.
For investors that means stepping forward and not back – growth capital will guide SMEs through the choppy waters. Yes, there will be casualties as not all businesses can succeed, but this should not distract from the significant opportunities that exist amidst the uncertainty.
Companies are in urgent need of reassurance and the confidence that capital and liquidity will be there, when they most need it, no matter what tomorrow brings. This confidence evaporated in 2008 at the start of the financial crash and it took years to rebuild. Investors cannot make the same mistake again. Now is the time to back business.
The message is unequivocal. Alongside BGF, funders and policymakers alike must raise their game and advocate for continued growth, committing to invest in the age of uncertainty. Now is the time to stand with business and stand with entrepreneurs – to be there.
Stephen Welton is CEO and founder of BGF