Simon Michaels, Managing Partner at BDO

Simon Michaels, Managing Partner at BDO

Mid-sized businesses in the UK have weathered the global downturn better than those in the renowned German Mittelstand, according to new figures released by business advisory and accountancy firm BDO.

BDO’s snapshot of the European mid-market shows that the turnover of the UK's mid-sized firms (€1.92 trillion) now exceeds that of the German Mittelstand (€1.78 trillion). BDO defined the mid-market as firms with turnover between £10 million - £300 million (€14 million - €414 million) annually.

Since 2009, the Mittelstand has grown by 12% compared to the mid-market by 33%. The UK has also overtaken Germany in terms of the number of people employed in their respective mid-markets – the UK employing 9.3million people compared to Germany's 9.2million.

The Mittelstand forms the backbone of the Germany economy with approximately 43,500 companies and has traditionally led the way for mid-sized businesses in Europe.

However, despite faring better through the global recession than other European financial centres, the Mittelstand is facing fierce competition from elsewhere on the continent. Mid-market growth in Italy and France has surpassed that of Germany at 16% and 20%, respectively. Although their markets may be smaller, BDO's results give a clear indication that the potential for mid-market businesses is on the up across Europe.

Simon Michaels, Managing Partner at BDO, said: "The UK mid-market is leading Europe. This is a massive achievement – one that we should be proud of, but not complacent about.

"Germany has always invested in its mid-market; it has policies directly aimed at the Mittelstand and culturally the Mittelstand stands as the economic backbone of the nation. While the UK's mid-sized businesses are worth more than the Mittelstand for the time being, there is so much more we can do to cement our position as Europe's mid-market leader."

BDO has introduced its Mid-Market Manifesto, a set of policies that could unlock the potential of the UK's mid-market, adding over £1.3 billion (€1.8 billion) to mid-sized companies' GDP contribution and creating thousands of jobs.

Some of BDO's specific policy recommendations include:

  • Temporarily reducing employers' National Insurance for manufacturing companies
  • Awarding government contracts on the basis of the employment and training benefits to the supply chain, not cost alone
  • VAT zero rating of supplies to companies that export