© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
June 24, 2014 5:14 pm
Britain’s long neglected Mittelstand collection of medium-sized businesses is to be the focus of government efforts to ensure the economic recovery leads to long-term improvements in the balance of trade and productivity, the business minister said.
Lord Younger of Leckie told GE Capital’s Leading from the Middle conference in London: “Mid-sized companies in Germany [known as Mittelstand] flourish and we want to emulate their success.
“We are not ceasing to support SMEs, far from it, but we will take a more segmented approach to support. MSBs will receive a more intensive one-to-one approach.”
A key focus would be to increase the number of MSBs selling their goods and services abroad, Lord Younger added, noting that 60 per cent of MSBs make less than 10 per cent of their turnover from overseas markets and a third do not export at all.
UK-based companies that fit into the MSB bracket are narrowing the performance gap with their German peers, according to research from Warwick Business School, commissioned by GE Capital.
Companies with annual turnovers of between £15m and £800m expect sales to grow on average by 6.1 per cent, compared with 4.8 per cent among the same group in Germany, 3.8 per cent in Italy and 3.4 per cent in France.
Challenges remain for UK MSBs, with cost pressures and concerns about skills shortages top of the list, according to the research. Only 37 of the UK-based MSBs interviewed offer apprenticeships compared with 75 per cent of the German companies, a key constraint on future growth, the report concluded.
Leslie Morgan, chief executive of Harrow-based Durbin, a specialist pharmaceutical wholesaler operating in more than 180 countries, said the environment for building substantial businesses had improved substantially in the UK in the past few years thanks to reductions in corporation tax and an enthusiasm about entrepreneurship.
“People are less ashamed to be successful,” he said, adding that the best thing government could do would be to “get out of the way” by cutting red tape.
Andrew Durbin, who was unrelated to Mr Morgan’s business but was also in the audience at the GE Capital event, sits on the board of five MSBs as a non-executive director. He said that, while all five were growing, only one was exporting.
He had helped introduce apprenticeships to several of these companies but admitted that it was harder to sell the concept for companies employing more highly paid entry level graduates.
“Among those that know about apprenticeships it is perceived that they can get decent quality people from it, but I still don’t think that enough companies know they can do it,” he said.
Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Sign up for email briefings to stay up to date on topics you are interested in