The role of SMEs to the United Kingdom
SME’s or small and medium-sized enterprises – are extremely necessary as they are the backbone of the economy. Why? Simply because the majority of companies in the United Kingdom are SMEs. In 2018, the government identified 5.7 million SMEs that is equivalent to 90% of all businesses in the country. From local stores to small tech firms, They are a big game player in these business sectors. In the UK and the rest of Europe, SMEs are known as independent businesses with fewer than 250 employees. They are usually situated in rural or edge of city areas and offer a lot when it comes to part-time employment. Now, if such small and medium businesses can contribute to the economy, what are the specific important factors?
SMEs Support Economic Growth
- A study by Santander showed that SMEs contributed to 51% of all turnover generated by the private sector in 2018.
- SMEs generate employment opportunities across the country.
- It helps produce a set of skilled and semi-skilled individuals that can be a foundation for future industrial and business expansion in the country.
- SMEs contribute to 60% of all jobs in the UK, employing an estimate of 16.3 million people. Moreover, it was reported to have generated over 2 million jobs in the past 5 years.
How SMEs impact the economy is in their ability to respond and adapt easily to changes in the economy basically because they are the ones who are more customer-orientated and have the means to understand clearly the needs of their local community. Therefore, SMEs are recognised as being vital players to the UK economy. Today, SMEs account for at least 99.5% of businesses across every main industry sector. This also clearly tells us that SMEs could be a promising key to boost the country’s productivity in the global economy.