The United Kingdom is failing to generate the fast growth small businesses that could turbocharge the economy’s lacklustre level of productivity, a major new report claims today.
According to the research from investment bank Goldman Sachs the UK has 400,000 more small companies than before the financial crash — a rise of around 50% — but fewer high growth “productivity hero” enterprises.
The study from Goldman’s 10,000 Small Businesses UK programme blames a shortage of talent exacerbated by Brexit, difficulties accessing finance, late payment by customers, and poor digital infrastructure for the problem.
As a result the number of businesses increasing headcount while also achieving productive revenue growth at a greater rate, is down by 3,000 from 39,000 (4.8% of established small businesses) to 36,000 (3%) today.
The report says: “The lack of productivity growth among small businesses is likely to be a significant factor in the historically low productivity rates impacting the UK’s economic growth.”
Charlotte Keenan, head of the Goldman Sachs 10,000 Small Businesses UK programme, said: “These research findings paint a challenging picture of the economic conditions for high growth businesses in the UK, but they also point to reasons to be optimistic.
Creating the right conditions for growth has the potential to add at least £100billion to the UK economy and create close to 90,000 jobs.” The report came as Tech Secretary Michelle Donelan warned that a lack of properly skilled workers could be forcing British companies to go to America.
Speaking at the launch of a government push to get more people into computing bootcamps she told the Standard that she wants companies “to continue to grow here and reach that next level and not capping out and ending up predominantly American”.
