Expert commentary on Food & Drink
The Economies of Scale
Commentary by John Longworth, Director General of the British Chambers of Commerce
Britain has a thriving private business sector – there are over four million active businesses in Britain, and over 99% of these are Small and Medium-Sized Enterprises (SMEs).
As a nation, we have seen substantial economic growth over the past few years. British businesses have been the driving force that kept us out of prolonged recession and into recovery ahead of most developed nations. It is time for us to repay the favour and help them through the next stage of their growth.
Every successful company naturally reaches a point where it needs to expand its operation, whether that’s to achieve the capacity to meet growing orders or to have the scale to compete for bigger contracts and break into new markets at home and overseas.
“As a nation, we may only represent 3% of global GDP, but we punch well above our weight in terms of our entrepreneurial talent and creativity”
Key to growth is capital – new equipment is a costly investment for manufacturers, and boosting staff numbers or moving to new premises can require considerable extra working capital for services firms.
Access to funding is an issue that has plagued British businesses for years, particularly since the financial crisis. Whereas other countries like Canada and Germany have excellent national business investment banks, for decades our own offering has been starved of resources. The result is that countless excellent home-grown enterprises are unable to expand and become targets for acquisitive overseas firms that covet the value that UK SMEs present. Helping UK firms to become confident and large enough to branch into new export markets is also essential to maintaining our national growth.
Over four million – The number of active businesses in Britain
As a nation, we may only represent 3% of global GDP, but we punch well above our weight in terms of our entrepreneurial talent and creativity. Our historic and cultural connections also give us access to global markets with rapidly expanding economies, including the Americas, the old Commonwealth, Africa and South East and North East Asia. Tapping into fast-growing economies will become increasingly important in driving our own growth, as well as reversing our historic trade deficit.
This is something that we at the BCC are working to strengthen through our Global Business Network, placing UK businesses directly in contact with experts who are based in these overseas markets. British goods and services have an excellent international reputation, but getting into markets before our competitors is key if we are to secure our presence there.
We need a fundamental shift in our economic model if the UK is to remain relevant and prosperous in a changing world economy. We want to see the next Apple or Samsung emerge from our shores. Supporting the dynamic SMEs, like those showcased here, will help achieve that aim.