Just 175, or approximately 0.0007 per cent of all UK companies have managed to grow their revenue by 20 per cent or more in each of the last five years, according to new research shared with City A.M. today.
The findings show the difficulties in producing fast-growing companies that can maintain significant growth rates over the medium and long term.
Some commentators have said that the UK, unlike the US, is not producing enough companies like Amazon or Google which have been able to deliver fast and sustainable growth year after year.
The research by accountancy and advisory firm Hazlewoods shows that out of the 240,000 private sector UK companies in the study, only around 1,000, or 0.004 per cent, have managed 10 per cent or more revenue growth in each of last five years.
“Being able to continue growing year after year is a major challenge for any business. Only a very small number are able to achieve this consistently,” said Ryan Hancock, Director at Hazlewoods.
“Perhaps there needs to be an even more deliberate focus from the Government on helping UK businesses scale up and continue their trajectory of growth,” he told City A.M.
“The UK has a lot of success stories but the UK economy would benefit if we had even more.”
As the Government attempts to manage its pandemic debt, some tax reliefs that are vital to businesses and entrepreneurs, such as the popular Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) may be under threat should the CGT rate increase from 20 per cent.
Hancock said this may disincentivise entrepreneurs from continuing to invest in and grow their businesses as they would have to pay a higher tax liability on the eventual sale of their business.
He added that the widespread difficulty for UK companies in maintaining fast growth rates shows how challenging it is to maintain a growth trajectory without long-term strategic planning and equity investment.
Many of the companies that have sustained 20% growth for five years or more have been private equity and venture capital-backed businesses.
Challenges which UK businesses may face include a smaller talent pool, particularly for SMEs in the science and technology sectors, compared to the likes of the US.