There’s been a tremendous focus on the UK economy recently, particularly as Britain continues to flirt with the risk of a no-deal Brexit.
Regardless of the terms on which the UK leaves the EU, however, there’s no doubt that small and medium sized businesses will play a pivotal role in shaping our nation’s economic future.
We’ll explain this below, while asking exactly how SMEs operate in the engine room of the British economy.
1. SMEs Dominate the Economic Landscape
SMEs are defined as limited businesses or corporations that employ 500 people or less. As a result of this, they account for a disproportionate amount of private sector firms throughout the UK.
In total, there were 5.7 million SMEs operating in the private sector at the beginning of 2017, with this number having increased 197,000 year-on-year.
In total, SMEs accounted for 99.9% of all private sector firms last year, with small businesses representing 99.3% by themselves. This highlights the dominance of SMEs across all industries and the general role that they play in creating jobs and funding the economy.
At the same time, successful SMEs have also become key targets for investors, particularly stock traders that leverage online brokerage platforms. This also impacts on the financial markets and the value of shares and stocks nationwide.
2. SMEs Reinvest Significant Amounts into the Economy
Of the 5.7 million private sector businesses active last year, an estimated 45% of these were registered for VAT or PAYE.
This means that an estimated 2.6 million SMEs were paying significant tax returns during the financial year 2017/18, in addition to their national insurance contributions.
Without this revenue, the government’s recent austerity drive would have been even more damaging, and there’s no doubt that small and medium sized businesses continue to reinvest significant amounts into local and national economies.
3. SMEs are the Main Employers in the UK
We touched earlier on jobs and the labour market, which has enjoyed excellent growth in recent times.
In fact, the unemployment rate in the UK sunk to just 4% at the end of the second financial quarter, and this could well decline further in the near-term.
SMEs have played a pivotal role in the growth of the labour market, as these firms employ a total of 16.1 million people nationwide.
This accounts for 60% of all private sector employment in the UK, making SMEs dominant employers with an influential part to play in this nation’s future growth.
