The mid-market is set to be the fastest growing part of the UK economy by 2020, according to international law firm Gowling WLG.
The research found that mid-sized businesses are expected to contribute around £335 billion to the economy by 2020, an 18% rise on its current contribution.
While large businesses have traditionally been the engines of growth for the UK, accounting for nearly half of GDP, it will see growth of just 8% before 2020. A global economic slowdown looks likely to mean a gradual decline for large companies until 2019, when they will see a rebound. They are forecast to increase in value by a modest 8% by 2020 to £928 billion.
And despite the focus on start-ups in recent years, Gowling WLG is actually predicting the contribution made by start-ups will actually decline between now and 2020. The research claims that in 2009, at the height of the recession, start-ups accounted for 46% of GDP. But as those start-ups continue to grow into scale-ups and mid-sized businesses, their contribution is now set to decline from 35% of GDP in 2015 to 25% by 2020, representing a 26% decrease in value terms.
The report, Make Way for the Middle, highlights the importance of a new sub-section that is driving growth for the mid-market, called 'Gazelles'.
These are companies that have seen turnover growth of more than 10% every year for at least five years, with a turnover of at least £30 million. One of the defining features of gazelles is their international nature and focus on exports, and by 2020 these companies alone are forecast to account for £1 in every £5 of exports.
Hugh Maule, partner at Gowling WLG, said: “A remarkable shift in the dynamic of the UK economy is taking place, creating a period of exciting opportunity for mid-market companies. Innovative new businesses and niche sectors are springing up across the country to support regional supply chains. This is the time for mid-sized businesses to decide how they will secure future growth, and the most successful will raise capital to expand, export and reach new markets.”