Three reasons the UK needs small businesses to grow

A newspaper with the headline for Job Market

Small businesses are often referred to as the lifeblood of the British economy and the Government is regularly urged to cut red tape and invest in initiatives which will help them expand.

But why exactly do we need small businesses to grow?

To create jobs

While the UK jobless rate has fallen in recent months, in October it still stood at 7.4%, above the Bank of England’s official target of 7%, with 2.39 million aged 16 or over looking for work (1).

Small businesses are the key to providing muchneeded jobs, with government figures showing they are responsible for almost half the job creation in the UK. Currently the UK’s 4.9 million businesses employ around 24.3 million people, according to the Federation of Small Business (FSB) (2).

To boost local economies

Data shows that smaller businesses tend to invest more in their local area, with research by the FSB highlighting that in 2012 small local firms generated £746 million more for the local economy than large local businesses.

For every £1 spent with an SME, 63p was re-spent in the local area compared to 40p in every £1 spent with larger firms (3).

To improve foreign trade (4)

The UK Government has set the ambitious target of doubling UK exports by 2020 (4) and small businesses are key to achieving this aim.

The FSB has predicted that if more small businesses took the plunge and started exporting as much as £792 million could be added to the economy each year (5).

 

1 http://www.itv.com/news/granada/2013-12-18/unemployment-rate-falls-by-29...

2 http://www.fsb.org.uk/stats

3 http://www.fsb.org.uk/News.aspx?loc=pressroom&rec=8116

4 http://www.nao.org.uk/press-releases/supporting-uk-exporters-overseas/

http://www.fsb.org.uk/News.aspx?loc=pressroom&rec=8108

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