Entrepreneurially-spirited mid-sized businesses have been the driving force behind overseas turnover in the West Midlands in the last year, according to new research from accountants and advisers BDO, underlining the critical importance of these companies to the region as the Government prepares to invoke Article 50 on Wednesday and begin Brexit negotiations.
The research reveals that mid-sized businesses in the West Midlands generated over £10billion (up by 6.7%) in foreign trade last year compared to the regions FTSE 350 businesses generating £1.7bn (down by 45%) and its small businesses generating £0.73bn (down by 4.7%).
Despite a volatile 2016 and with the shadow of Brexit negotiations looming, mid-sized firms remained confident throughout the UK and continued to grow overseas turnover; increasing overseas trade by 7% (from £119bn to £127bn). In comparison, the levels of overseas trade of FTSE350 and small businesses across the entire UK in 2016 fell 30% (from £524bn to £366bn) and 13% (from £12bn to £10.4bn) respectively.
To ensure that this growth continues, BDO is calling on the Government to place these ‘overlooked and undervalued’ mid-sized businesses (what BDO calls the UK economic engine) at the heart of its thinking as it prepares to invoke Article 50 on Wednesday.
While the UK’s economic engine consists of only 30,000 UK companies (1.5% of all UK companies) it contributes one third (£1.2tn) of all UK turnover. Yet despite driving overseas growth and making a significant contribution to domestic markets, the UK economic engine falls into a policy and profile gap: too big to benefit from government initiatives aimed at small firms but too small to win the attention that FTSE firms command from the media and policy makers.
In response, BDO has set out twenty-two policies which it thinks will put the UK’s mid-sized businesses at the centre of a ‘new economy’ which will thrive post Brexit. For example, the ‘New Economy’ report suggests introducing a VAT zero rating on supplies to companies that export once Brexit negotiations are finalised and a call for the UK Government to battle hard for a variant of financial passporting as part of the Article 50 negotiations.
Richard Rose, Midlands Tax Partner at BDO, said:
“High-performing and entrepreneurially-spirited mid-sized businesses are the economic engine of UK international growth in the East Midlands. Despite all the uncertainty of the past twelve months these companies have taken calculated investment risks and prospered. The success of these businesses should not be taken for granted and, with Article 50 being invoked in two days’ time, it is crucial that the Government factors the needs of the East Midlands mid-sized businesses into their thinking ahead of negotiations”.
