As UK productivity levels have slowed, smaller businesses remain engines for growth.
Goldman Sachs, in partnership with the British Business Bank and the Enterprise Research Centre with support from the Scale-Up Institute and Saïd Business School, Oxford University today released a new report detailing the critical role UK SMEs (small and medium-sized enterprises) can play in addressing the UK's 'productivity gap', a deficit identified in the UK Government's Productivity Plan (July 2015).
The report, Unlocking UK Productivity – Internationalisation and Innovation in SMEs, finds that smaller businesses have the potential to contribute to UK economic growth in three key ways:
• stimulating innovation
• spurring competition
• accelerating job creation.
UK smaller businesses are key contributors to UK growth, with around 10,000 high growth SMEs representing less than 1% of established businesses in the UK but generating 20% of all UK job growth. Despite this, innovation and internationalisation represent largely unexplored opportunities for boosting productivity growth in the sector.
More than 110,000 UK SMEs have the potential either to start exporting or expand their existing exports. If successfully encouraged, £1.15bn gross value ('GVA') could be added to the UK economy in the first year.
There is also evidence of a clear 'growth ambition gap' between UK SMEs and their counterparts in other G8 economies. In order to close this gap, the report recommends improvements in the entrepreneurial ecosystem to help build growth ambition – with improved access to capital and expanded business education being identified as critical enablers.
Alongside the report, Goldman Sachs today announced the expansion of the 10,000 Small Businesses programme in the UK. At a time when further engagement is needed to support the UK economy and boost productivity, the programme will be opened up to businesses throughout the UK, beyond the four current hubs. By expanding the programme's reach, developing new partnerships and leveraging technology to deliver a new online and residential learning experience, including new modules on internationalization and innovation, 10,000 Small Businesses will support the entrepreneurial community and the UK's overall growth agenda. This week in partnership with Bloomberg L.P. and Programme Co-Chair Michael Bloomberg, we are also hosting the inaugural 10,000 Small Businesses UK Coaching Session, which brings together hundreds of high-growth small businesses for a day-long series of training sessions with experts from Goldman Sachs and Bloomberg L.P. experts designed to give these entrepreneurs the confidence and skills to tackle and overcome challenges and accelerate growth.
The Rt Hon Sajid Javid MP, Secretary of State for Business, Innovation and Skills said:
"This report by Goldman Sachs and the British Business Bank highlights the important role that small firms can play in boosting productivity across the UK. Small businesses are the backbone of the British economy and I want to see more of them growing and creating jobs. There is support out there from Government and from programmes like the Goldman Sachs 10,000 Small Businesses initiative, and I would urge any small firm with big ambitions to consider it."
Michael Sherwood and Richard Gnodde, co-CEOs of Goldman Sachs International added:
"We are very pleased to continue our commitment to supporting high-growth small businesses in the UK through our '10,000 Small Businesses' programme. We believe the private sector can make important contributions to supporting small business growth, creating jobs and boosting economic growth."
Ron Emerson, Chairman, British Business Bank, said:
"As a champion for smaller businesses in the UK, we are well aware of the importance of high growth SMEs to the nation's economy. We are therefore delighted to have contributed to this report and welcome the expansion of Goldman Sachs Small Business 10,000 programme."