How can we improve the long-term growth prospects for the UK economy? If we’re seeking to build on existing strengths, the finance and IT sectors should be a focus.
The turnover of the median mid-sized company increased by 13.3% in this period – albeit there was a drop of almost 8% between 2019 – 2020 due to the Coronavirus pandemic.
There was a wide spread of results. Companies in the top 10% of performers doubled their turnover. And those in the top 1% increased their turnover by more than five times. But 13.8% of mid-sized companies had ceased operating or recorded no turnover by 2022.
Financial services companies, alongside those in wholesale and retail trade, information and communication and administrative and support services, made up the majority (62%) of firms in the top 1% of turnover growth from 2017 – 2022.
Companies in financial services made up 20.2% of this group in 2022. That’s made more significant by the fact they accounted for just 8.5% of all mid-sized businesses in the UK.
Companies in wholesale and retail also took a significant share of the top 1% of performers in 2022, at 16.1%. But they also made up a larger share of all mid-sized companies, at 18.5%.
Almost half (49.4%) of companies in the top 1% by turnover growth were based in London. A further 11.7% were based in the South East of England.
If we look at just firms in the top performing sector – financial services – London firms were around twice as likely to be in the top 1% of businesses by turnover growth than those outside the capital.
Any growth initiatives that seek to accelerate UK growth by favouring some sectors over others should take account of the existing competitive and structural structures firm operate within. Our research suggests that mid-sized companies in finance and IT are the most likely to perform well in the current environment. Given that, these sectors may need to form part of any strategy that aims to build on the existing strengths of the UK economy.
