Medium-sized businesses are punching above their weight in the export stakes, accounting for £1 in every £4 exported from the region, according to new research by accountancy and business advisory firm BDO LLP.
Mid-sized businesses are exporting goods and services to the value of almost £5bn each year and account for 23% of all East Midlands exports, despite making up less than 1% of all firms.
The region’s export value is higher than the whole of Scotland’s mid-market, however it falls behind other UK regions including the North West, which has an export value of £6.4bn, and the East of England and the West Midlands (both £6.3bn).
The consumer markets sector (retail, wholesale and leisure) is the most prolific local exporter and responsible for almost 40% of international sales in the region. Manufacturers come in second place, exporting £1.5bn worth of goods, followed by professional services (£587m).
Interestingly, fast growth TMT businesses in the East Midlands are contributing more in overseas sales than they are in West Midlands, Yorkshire, North West and North East.
Gareth Singleton, partner and head of BDO LLP in the East Midlands, says medium-sized firms are still under-valued when it comes to their contribution to UK growth and economic recovery.
“Approximately 75% of all mid-market exports take place outside London and South East, yet the Government’s focus still lies heavily on the City of London.
“As policy makers strive to rebalance the economy, it’s important to recognise that regional mid-market firms contribute significantly. What’s exciting, yet equally frustrating, is that they’d have even more growth potential if the right support was in place,” said Singleton.
“The appetite for international expansion is there – we saw that in spades at the Export Week roadshow that took place across the region last week. It’s now up to the government to put the right policies in place and give East Midlands companies the tools to thrive.”
As part of its Mid-Market Manifesto, BDO is calling on the government to consider three policy recommendations to help mid-sized businesses make the decision to export more confidently.
These are to introduce a VAT zero rating to companies that supply to qualifying exporters – something that is already in place in Ireland; agree an exemption from local taxes up to a £1m threshold for when businesses open a new branch or subsidiary overseas; and a review of the unintended consequences of the Bribery Act which, by its sheer complexity, is acting as a real regulatory barrier for new exporters.
