Why now is the time to champion mid-sized businesses

Lee Mooney, our Commercial Lines Managing Director at RSA, on the 'Mighty Middle Market' report and why now is the time to champion mid-sized businesses.

Despite facing a myriad of challenges, the UK economy has demonstrated remarkable robustness, with mid-sized businesses emerging as key drivers of this success. The UK economy has been seeing signs of greater resilience than expected, with inflation falling and the labour market remaining stable. Positive indictors highlighted by economists include an unexpected rebound in retail sales in January and GDP data which showed that the economy avoided a recession in the last quarter of 2022, despite high inflation and rising borrowing costs.

Further indications of a rebound, came via the Purchasing Managers’ Index which rose to 53 in February , anything above 50 indicates growth. 53 is the highest level in eight months and for the first time since July 2022 a majority of businesses reported an expansion in activity. ?

Although this is a welcomed shift from the doom and gloom narrative, this change may not have been expected by many. It does, however, speak to a report, we at RSA, commissioned towards the end of last year, which found that the majority (71%) of UK mid-sized businesses predicted a ‘good’ or ‘very good’ 12 months ahead. This sector, the ‘Mighty Middle Market’ have shown impressive growth and potential, expanding rapidly to carve out a prominent place in the UK economy.

Conducted in conjunction with the Centre for Economics and Business Research, the study suggested mid-sized businesses’ optimistic view was grounded by the experience of this sector, who weathered the financial crises between 2009 and 2019, growing their gross value added by nearly 40%.

What we uncovered was not coincidental – mid-sized businesses have historically demonstrated remarkable resilience. The number of mid-sized businesses grew every year bar two between 2010 and 2022. And while they may only account for between 1.5% and 1.7% of the total number of businesses in this period, they delivered a disproportionate level of activity, accounting for 18.5% of total business revenue in 2019. Aside from their economic contribution, mid-sized businesses also employed 13.1% of the UK workforce in 2022, making this sector a critical provider of growth, employment opportunities and tax receipts. ?

Despite their vital contribution, mid-sized businesses remain largely underappreciated. This could hamper their growth potential as the economy recovers. There is an unfair imbalance of attention and support we give to different types of businesses. It’s apparent that as a society we rightly celebrate small businesses and closely follow the activities of large corporates. Using social media listening tools to gauge conversations around small and mid-sized businesses, we found that small businesses saw 60 times more mentions than mid-sized businesses over the last year. From a perception’s perspective, this can leave a gap in our understanding – and even awareness – of their importance and needs. ?

To unpack the support this sector requires, we also investigated their key concerns, which are focused on energy costs, labour costs and pressures on customer demand. Mid-sized businesses are also more likely than small businesses to view R&D, talent retention and acquisition as priorities. But as we see more uplifting news stories on the business environment, it’s likely that these concerns will evolve.

It is also important to note the depth of any recession will depend on choices made in the upcoming Budget and there is much to be done to resolve the awareness challenge mid-sized businesses face. Here at RSA, we recognise their challenges. With many of our customers operating in this vital sector, we are uniquely positioned to help businesses and society prosper in good times and be resilient during challenging periods. In the coming months, we will be doing more to work closely with industry and government partners to amplify their voices, ensuring their needs are met to help them succeed.

You can read our report, ‘The Mighty Middle Market: What the UK’s Mid-Sized Businesses Need to Succeed’, here .

Lee Mooney , Managing Director - Commercial Lines, RSA Insurance