Small and medium sized businesses (SMEs) in the top 10 UK cities are forecast to contribute £241bn to the UK economy by 2025, according to a new study from specialist challenger bank Hampshire Trust Bank.
The annual research, conducted in partnership with the Centre for Economics and Business Research (CEBR), reveals SME contributions to the economy will grow by 19% from 2016 to 2025. UK SMEs2 currently contribute £202bn3 to the economy, with the vast majority of this value originating from companies in London. However, SMEs in Leeds and Greater Manchester are set to boost their contribution the most by 2025, with 26% growth expected in both cities in the 2016 – 2025 period. Bristol follows closely behind, predicted to increase its SME contribution by almost a quarter (23%).
The 2016 Hampshire Trust Bank study previously forecast SMEs add £217bn4 to the UK economy by 2020. An analysis of the latest economic data now predicts these companies will add £219bn. Looking ahead to the years 2020 – 2025, six of the top 10 cities are forecast to grow their economic contributions by 10% or more within this five year period.
In light of the ongoing economic uncertainty caused by Brexit, the study also reveals more than a third (34%) of SMEs felt their business growth expectations had decreased following the decision to leave the EU. This is particularly being felt in London (43%) which indicates to why the Capital is not predicted to grow as quickly as other regions of the UK.
Mark Sismey-Durrant, Chief Executive at Hampshire Trust Bank, said: “SMEs are forecast to grow their economic contribution significantly over the longer-term, which serves as a critical reminder of the important role these businesses play in ensuring the success of the UK. We also should note from our study the lowering in confidence amongst some SMEs. If the UK is to be prosperous as we move away from the European Union, we need the government to keep the spotlight on smaller companies by creating conditions which will support their continued growth, as our research demonstrates how much we need these companies to develop and achieve their ambitions.”
Nina Skero, Managing Economist at CEBR, said: “This study demonstrates how SMEs are making a vital contribution to city economies across the UK. The importance of SMEs is on the rise, therefore we hope this research will boost confidence among business leaders in the UK so they may continue to support job creation and capitalise on opportunities for growth.”
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