Mid-sized businesses across the regions and industries of Scotland (2010-18)

Mid-Sized Businesses (MSBs) are defined as those with turnover of between £25m and £499m. Growth in the number and performance of MSBs matters because they disproportionately contribute to growth and are more innovative, more likely to export and have higher productivity. Understanding MSBs across Scotland and what trends in growth exist (total number as well as their turnover and employment) will help the development of tailored policy responses specific to local circumstances. This research note sets out the extent and shape of MSBs across the regions of Scotland and how this has changed since 2010.

The methodology consisted of analysis of ONS (Office for National Statistics) data.

The analysis found that whilst there are 2,250 individual MSBs in Scotland, there are 6,620 active MSBs across Scotland’s eight regions; meaning each MSB is active in 2.94 regions on average. The Glasgow City Region has the most MSBs, who have the most employment and generate the highest level of turnover. However, the Edinburgh and South-East region has been driving the growth in Scotland’s MSBs since 2010, in total number, total employment and total turnover. MSBs in Aberdeen City and Shire have seen a significant decline since 2015 in turnover and in employment (but not the number of active MSBs), although Aberdeen City’s MSB total number was down -10% in 2018 from 2016. The Highlands and Islands region has had strong performance since 2010, predominantly from the Highlands local authority area, contributing 16% of the total Scottish growth despite only having 9% of total MSB activity. In MSBs activity and growth, the analysis showed that the South of Scotland and Ayrshire are falling behind other regions. Whilst disparities exist across regions, travel to work areas likely mitigate the potential impact of this in and around cities, but for these two regions, their overall levels of MSBs in Scotland and their growth levels present a challenge. Three key challenges to achieving sustainable, inclusive economic growth were identified: growth in MSBs is being predominantly driven by foreign-owned MSBs, with Scottish MSBs, despite increasing in number, becoming smaller (on average); Scottish-owned MSBs are more likely to be in locally-traded industries; and growth and activity of MSBs is concentrated in cities, and this trend towards cities is increasing. It is suggested that these need to be considered in a wider context of business creation, entrepreneurship, business growth and regional economic dynamics.

No recommendations were made.