UK mid-sized businesses fail to keep pace with EU counterparts

21 May 2018

  • Britain’s mid-sized businesses fall off the top spot for revenue growth, sliding from first to fourth place in EU rankings
  • German mid-sized businesses saw revenues shrink, but turnover remains the largest with revenues of £1.4tn
  • Italy excels with 20% growth rate as revenues hit £1tn
  • UK mid-sized businesses still outperform growth in other EU countries over a five-year period and generate the most profit
  • The UK’s mid-sized businesses are vital to the economy, creating one in four jobs

British mid-sized businesses have fallen off the top spot for revenue growth among the leading five EU economies as Brexit uncertainties and a weak domestic outlook take their toll, according to new research published today by accountancy and business advisory firm BDO LLP.

The UK’s mid-sized businesses have fallen to fourth place behind their Italian, French and Spanish counterparts in the last 12 months. The latest figures from BDO show that UK mid-sized businesses increased turnover by 7% to £1.3tn; lower than Italy (which grew turnover by 21%), France (15%) and Spain (14%).

Germany’s equivalent mid-sized businesses – which still generate the largest combined turnover of £1.4tn – saw revenues shrink by 8%, falling from second to fifth place in the growth rankings this year. The German mid-market also saw profits slump by 13%, while the UK continued to deliver comparatively strong profit growth of 19%.

Referred to by BDO as the UK’s ‘economic engine’, British mid-sized businesses – which include firms with a turnover between £10m-300m, private equity-backed businesses and AIM-listed companies – are the second largest by turnover size of the five economies analysed. In third place by turnover size is France (£1.2tn), followed by Italy (£1tn) and Spain (£665bn).

Looking at growth over five years, the picture for the UK is encouraging. According to BDO’s New Economy analysis, the UK continues to outperform other EU countries, with mid-market British businesses increasing revenues by a third (33%). This compares to France (31%), Germany (30%), Italy (26%) and Spain (22%).

Paul Eagland, Managing Partner at BDO, said:

“The UK economy has suffered its weakest period of GDP growth in five years and it is clear that businesses are feeling the effects of ongoing Brexit uncertainty.

“But we should not take a short-termist view on the performance of the UK’s mid-sized business growth, which is still surpassing that of small and large domestic businesses, and has outpaced the five leading EU economies over a five-year period.

“What these latest findings tell us is that, more than ever, the Government cannot lose sight of the needs of ambitious mid-market UK firms while EU negotiations take place. These mid-sized businesses are the engine room of the British economy and must be given more support as we enter a new chapter of UK plc post-Brexit.” 

BDO has also published analysis of the global M&A market, which shows the UK & Ireland mid-market experiencing its quietest period of activity in almost a decade. Despite reports of global M&A transactions reaching record highs, just 91 mid-market M&A deals were completed in Q1 2018 with an aggregate value of £7bn – the least active period since 2009.

According to BDO’s Horizons findings, mid-market trade deals within the UK & Ireland also plummeted during Q1, with a 38% decline in both volume and value.

BDO’s New Economy report, which calls on the government to better support the UK’s overlooked and undervalued mid-market, can be downloaded here.

Summary of key research

Country

Turnover (£)

Last year turnover increase

Five year turnover increase

Profit (£)

One year profit increase

France

1.2tn

15%

31%

63bn

36%

Germany

1.4tn

-8%

30%

70bn

-13%

Italy

1tn

21%

26%

47bn

42%

Spain

665bn

14%

22%

39bn

82%

UK

1.3tn

7%

33%

111bn

19%

 

ENDS

Notes to editors

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.

Our clients are Britain’s economic engine – ambitious, entrepreneurially-spirited and high growth businesses that fuel the economy. 

We share our clients’ ambitions and their entrepreneurial mind-set. We have the right combination of global reach, integrity and expertise to help them succeed. 

BDO LLP

BDO LLP operates in 18 offices across the UK, employing 3,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP has underlying revenues of £428m and is the UK member firm of the BDO International network.

BDO’s global network

The BDO global network provides business advisory services in 162 countries, with 74,000 people working out of 1,500 offices worldwide. It has revenues of $8.1bn. 

Methodological notes

BDO’s research is based on an analysis of the Fame and Orbis databases of company information and business intelligence.

Mid-sized companies for each country were classed as being either (i) mid-market businesses (with a revenue between £10m and £300m); (ii) AIM-listed businesses (or the equivalent leading secondary market in each country); (iii) private-equity owned businesses.

The secondary market chosen for each country was:

UK: AIM
France: AlterNext
Spain: Alternativo Bursatil
Italy: AIM Italia
Germany: Market Max

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