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- Executive Summary
Smaller businesses (including micro, small and medium-sized enterprises) are the foundation of Britain’s economy, comprising 99.8% of all private sector businesses and employing 60% of the workforce. In 2024, 5.54 million smaller enterprises contributed £2.8 trillion in turnover, underscoring their vital role in national growth, innovation, and regional resilience.
Despite their importance, these businesses face persistent barriers including restricted access to finance, poor payments practices, regulatory burdens, and fragmented representation. This report sets out the current landscape, highlights critical challenges, and proposes targeted opportunities to unleash business potential, productivity and growth, calling for a national strategy that places small businesses at the heart of economic policy.
- Introduction: Britain’s Small Business Marketplace 2024
- 6 million private sector businesses operate across the UK 99.8% of which are micro, small or medium sized enterprises
- Small businesses (0–49 employees) account for 5.5 million firms, representing 99.2% of the total
- Together micro, small and medium firms employ 16.6 million people (60% of private sector employment)
- and generate approximately £2.8 trillion in turnover (52% of the private sector total)
- Small and micro businesses (0–49 employees) specifically employ 13.0 million people (47%) and contribute £1.8 trillion (36%) of turnover.
- Future projections (assuming modest growth):\
| Year | Estimated Total Businesses | Estimated Private Sector Employment | Estimated Turnover (£ trillion) |
| 2024 | 5.61 million | 27.8 million | £4.55 trillion |
| 2025 | 5.66 million | 28.1 million | £4.61 trillion |
| 2026 | 5.72 million | 28.4 million | £4.67 trillion |
| 2027 | 5.78 million | 28.7 million | £4.74 trillion |
| 2028 | 5.84 million | 29.0 million | £4.81 trillion |
| 2029 | 5.90 million | 29.3 million | £4.88 trillion |
- Composition of the Business Population1 million sole proprietorships (56%)
- 1 million actively trading companies (38%)
- 356,000 ordinary partnerships (6%)
- 2.6 million businesses registered for VAT or PAYE (48% of the total).
- Regional and Sectoral Breakdown
- Construction leads with 16% of small and medium sized businesses
- Professional, Scientific and Technical Activities account for 14%
- Wholesale and Retail Trade represents 10%
- London (983,000 businesses) and the South East (907,000 businesses) together house 34% of the UK business population.
- England experienced a decrease of 125,000 businesses.
- Scotland saw an increase of 57,000 businesses.
- Wales gained 1,000 businesses.
- Northern Ireland added 11,000 businesses.
- Largest decreases: London (-67,000) and North West (-50,000).
- Largest increases: South East (+55,000) and North East (+10,000).
- The Importance of Small and Medium Businesses to UK Growth
- They drive 50–75% of innovation
- They contribute 60% of private sector employment and around half of turnover
- They enhance regional economies and community resilience
- They significantly support local social initiatives and public wellbeing.
- Barriers to the Growth of micro, small and medium enterprises
- Difficulty finding appropriate funding and investment for stage of business
- Poor Payment practices leading to cash flow management problems
- Regulatory burden including tax, reducing emissions, employment law changes
- Limited understanding of the needs of smaller businesses
- Policymaking skewed towards large businesses with greater lobbying power
- Lack of a voice for smaller businesses
- Speed of technological change
- Support available but impossible to navigate.
- Opportunities to Accelerate Growth of vital smaller businesses
- Better support to become funding/investment ready
- Easier and more navigable access to appropriate support for technological transformation and adoption
- Improved data gathering and analytics delivering better information and insights for policymakers
- A unified voice speaking on behalf of smaller businesses.
