UK’s mid-sized firms at fastest growth since Labour elected
Middle-market businesses are growing at their fastest rate since Labour was elected last July, fresh research has suggested, as UK bosses shake off cost increases in taxes and utility bills.
Labour has made economic growth a central mission in government, with small and medium-sized firms highlighted as key to driving national income.
Fresh research by Natwest has suggested that mid-market service providers saw their strongest rate of growth in 15 months in June.
The tracker, which uses data from S&P Global’s purchasing managers’ index (PMI), suggested the service sector was “solely responsible” for the upturn.
Middle-market firms benefitted from more sales projects and new product launches, performing better than smaller firms struggling with higher costs and lower demand.
Employment at middle-market corporates, which included those with between 100 and 2,500 staff, saw a “modest” decrease due to redundancies and decision not to replace leavers.
Bosses were also more upbeat about their prospects, with companies relying on customer demand to pick up in the coming months and investment to boost capacity.
Falling interest rates were also highlighted as a key factor enabling growth at these companies, NatWest researchers said.
Business confidence remained below long-term averages, however.
Firms look for growth policies
Sebastian Burnside, chief economist at the Big Four bank, said it was “encouraging” to see larger companies report higher growth and dust off higher costs.
“After a rollercoaster year for UK business sentiment, we are starting to see signs of improvement,” Burnside said.
“Small and medium-sized businesses have found the environment challenging, but positively, confidence has picked up since April’s 29-month low.
“This suggests that receding concerns about the impact of US tariffs and lower input cost inflation are having some impact.”
Larger businesses have been offered sweeteners in the form of deregulation, energy subsidy promises and industrial strategy designed to provide support for high growth sectors in the UK economy.
But a gradual decline in payrolled employees, higher tax fears and low growth forecasts risk putting pressure on businesses uneasy about their futures.
Natwest’s commercial chief Robert Begbie said the bank was providing support to mid-market firms by having set up a group made up of government officials and business leaders aimed at influencing “growth-enabling policies”.