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As the UK’s mid-sized businesses gear up for the ease of lockdown restrictions, they plan to recruit more employees as well as invest in expansion, new data has revealed.
Accountancy and advisory firm BDO said these firms will “spearhead the UK’s economic recovery”, with 86% of respondents surveyed saying they are looking to recruit more staff over the next six months, and over half (54%) are planning permanent appointments.
BDO surveyed leaders from 500 medium-sized businesses across the UK to uncover their plans for the year as the UK progresses with its vaccine rollout programme.
It found that almost three quarters of businesses based in Yorkshire and the Humber, as well as Central South, will add permanent staff to their ranks.
The government’s £3,000 ($4,131) apprenticeship grant has encouraged businesses, with over a third (36%) of businesses stating they would now hire apprentices as a direct result of this incentive.
70% of businesses said they planned to recruit in this area regardless of the incentive.
Ed Dwan, partner at BDO, said: “Mid-sized businesses are the engine of the economy; they have often proven robust even during the most uncertain economic conditions. The resilience they have demonstrated over the past year will mean they are well-placed to benefit from the vaccine roll-out and gradual lifting of restrictions. Ultimately these businesses will drive the UK’s economic recovery forward."
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The report also found that three quarters of mid-tier businesses believe 2021 is the time to invest, and over a quarter (26%) plan to invest in new locations or M&A.
Respondents also said they believe they are well supported by the government for the year ahead.
73% agreed chancellor Rishi Sunak promised enough to support the regional “levelling up” agenda in his March budget, while 59% believe that their region will be given enough financial support over the next 12 months.
Nearly half of businesses (47%) are planning new investments following the “super deduction” initiative, which allows companies to cut their tax bill by up to 25p for every £1 they invest.
Three quarters of businesses (75%) expect revenues to return to pre-pandemic levels within a year of the strictest restrictions being lifted.
Another third (33%) expect pricing of products and services to increase, likely reflecting a need to pay back debt or recover higher costs.
"The strength of the mid-market economy can’t be taken for granted. The results show that Government support has been vital for this segment of the economy so far, but areas such as access to finance and support on supply chain disruption will be crucial in creating an environment that allows these businesses to thrive," said Dwan.
The report also noted that in 2015, the CBI estimated that the growth of just 3,000 mid-sized firms from 2010 to 2013 was enough to drag the country out of recession and into growth after the financial crash.
"If more firms had rebounded quickly and hit pre-recession growth rates, then it could have added tens of billions of pounds to the UK economy," BDO said.
Earlier this week, the Recruitment and Employment Confederation (REC) said businesses’ confidence in their ability to hire new staff continued to improve in the three months to February 2021.
REC chief executive Neil Carberry, said "hiring companies are confident about bringing people into their businesses now, and that has to be good news for all of us."
Meanwhile, the Office for National Statistics confirmed last week that the UK jobless rate was 5% in the three months to January, down from 5.1% in December. Economists had expected the rate to tick up to 5.2%.
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