Let’s give scale-up firms a leg-up
Commentary by Carolyn Fairbairn, Director-General, CBI
Much has changed since last year’s publication of this report. But while the political centre of gravity has shifted, businessmen and women across the UK have been getting on with leading their companies.
And in important respects, the challenges and opportunities remain the same. As the UK seeks to forge a new relationship with the world, raising the productivity of our economy is now more important than ever. Productivity growth will help spread prosperity outside London and the South East and drive the UK economy through the uncertain times ahead. There is, after all, a lot of truth in American economist Paul Krugman’s quote: “Productivity isn’t everything, but in the long run it is almost everything”.
- 3% - the increase in investment in r&d that the cbi wants to see by 2025
Scale-up firms know this better than most, and their success is critical to the UK. In 2013, just 4% of fast-growing companies were responsible for nearly 20% of productivity growth in the UK economy. And, within the scale-up community, highly productive firms are twice as common. It’s heartening that the Government’s Industrial Strategy, long called for by the CBI, specifically emphasises support for scale-ups.
“Helping scale-ups go from strength to strength will improve our productivity and help raise living standards right across the country”
The health of the financial services industry is critical to growth firms, which rely heavily upon access to a diverse range of funding to fuel their success. Maintaining this will be particularly important in the context of Brexit, with potentially lower funding available to UK businesses and universities. Furthermore, the establishment of the Industrial Strategy Challenge Funds, which includes additional money for research and Innovate UK, makes clear that the government has recognised the central role science and innovation play in growing a modern, productive economy. Funding for venture capital through the British Business Bank will also be positive for the overall innovation ecosystem, helping start-ups to scale up.
“The health of the financial services industry is critical to growth firms”
Innovation has always been an important ingredient for success, as the swift adoption of new technologies is a trait common in most scale-ups. The UK has a great environment for new ideas but invests less in research and development (R&D) than its international competitors. That’s why the CBI is at the forefront of a campaign to increase public and private investment in R&D to 3% of GDP by 2025.
- 4% of fast-growing firms were responsible for 20% of uk productivity growth
Ultimately, as the government negotiates our exit from the European Union (EU) it must do everything in its power to demonstrate that the country is welcoming and open for business. In the meantime, helping scale-ups go from strength to strength will improve our productivity and help raise living standards right across the country.