New forecasts predict that the value of small businesses in Britain is to reach £217bn by 2020, equating to 27 per cent of all private venture contributions to the UK economy.
Research conducted by challenger bank Hampshire Trust, in partnership with the Centre for Economics and Business Research forecaster (CEBR), indicated a growth in enterprise across all UK regions, with total economic input from small businesses set to increase by 11 per cent between 2015 and 2020.
Mark Sismey-Durrant, chief executive of Hampshire Trust Bank, said in a statement that the data re-iterated the role of small enterprises as the “engine room of the economy”.
“The sizeable contribution [of enterprise] to the fortunes of the UK economy cannot be ignored”, he added.
It was predicted that London would see the largest increase in the number of small firms operating as well as the total contribution made to the economy. More than half a million firms were expected to generate £164bn by 2020 in the city.
However, the fastest growth in the economic value of small enterprise was forecast in the North of England.
Small enterprise in Manchester and Leeds was expected to increase its worth by 15 per cent over the next four years, suggesting that the Northern Powerhouse is ready to rival the capital in its economic output.
With a predicted total value of £14bn by 2020, compared to £6bn in Birmingham, the data suggested that Manchester is breaking further away from other northern cities in the value of its small enterprise sector as it seeks to close the gap on London.
In a statement, Nina Skero, managing economist at CEBR, spoke of the “positive story to be told” about the growing importance of small enterprise in every UK region.
She said: “It is encouraging to see such strong growth being mirrored outside of the capital.”
Despite the growth forecasts for small enterprise in the city, Manchester was this year found to be the most expensive place to start a business in the UK. The average startup costs in the city, according to business financers LDF, was £44,733 – far exceeding the national average of £27,520.
Government urged to create a “digital revolution” for the Northern Powerhouse.
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