According to the latest study by the Enterprise Research Centre (ERC) growth and start up rates for the UK’s small and medium-sized enterprises (SMEs) have returned to their pre-recession levels.
There are now a total of 5.2 million businesses in the UK and 99 per cent of them are classified as SMEs. In total they employ over 15 million people and have a total annual turnover of £1.6 trillion, making up 47 per cent of all business turnover.
Helped by the UK’s recovering economy, their growth rate reached 2.8 per cent in 2014 and, after years of decline, small business borrowing has increased according to the Bank of England.
The Financial Times claim that by the end of last year, the number of jobs created in the private sector since 2008 had exceeded the number of jobs lost by 400,000.
Deputy Director of ERC, Mark Hart, said:
“SME Britain is finally back to where it was before the recession in terms of jobs, growth and start-up activity."
“For many SMEs, it’s been a long, hard road over the past few years but our research is showing that entrepreneurs and small to medium-sized businesses right across the UK have the wind back in their sails.”
The ERC findings also stated that 1 million SMEs ‘collapsed between 2008 and 2014, costing 5.7m jobs. A further 7.3m jobs were cut by larger companies, accounting for 13m in total.’
‘New start-ups created 4m jobs over the same period while other companies hired 9.4m, creating 13.4m new jobs.’
Claiming that the UK economy returned to the pre-2008 levels in mid-2014, the gap between the highest and lowest levels decreased by 5.2 per cent.
The number of new businesses established also entered recovery mode with 294,300 new enterprises established in 2014.
However, despite a sharp rise year on year, they have only just caught up, due to the damaging decline in 2009, to 27 per cent
In turn, newer SMEs are also growing at a fast rate. With the figures showing that in t he years between 2009 and 2012, 4,000 start-ups in the UK made an annual turnover of over £1 million, and between 2011 and 2014 over 6,000 achieved that figure.
However, economists are still issuing the warning that the economy is still fragile, reliant on the consumer demand and low inflation, that may not last.
The full findings from the ERC will be published on Tuesday at the State of Small Business Britain conference in Birmingham.
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