Mid-sized businesses in Scotland 2010-18

Mid-sized businesses (MSBs) are defined as businesses with a turnover of between £25m and £500m. Evidence demonstrates MSBs to be more productive, more innovative and to disproportionately contribute to economic growth. Therefore, increasing the numbers and size of Scotland’s mid-market is critical to achieving sustained economic growth. This note presents the latest analysis of the extent and shape of MSBs in Scotland. It covers the period of 2010-18 and presents breakdown across sector, employment and nation of ownership. The data relates solely to activity within Scotland.

The methodology consisted of analysis of ONS (Office for National Statistics) data to consider the changes in Scotland’s mid-market since 2010.

The analysis found that since 2010, the number and impact of MSBs in Scotland has increased. Despite this, the average Scottish MSB is smaller now than eight years ago. In 2018, there were 2,250 MSBs active in Scotland. This represents an increase of 13% since 2010. In terms of turnover, MSBs generate £66.7bn of total turnover in Scotland, an increase of 15% since 2010; and 25% of all private industry turnover in Scotland. In 2018 total turnover grew after a decline in 2017, but remains £1bn behind 2016’s total. The total employment of MSBs in Scotland is 432,000 – 16% of all Scottish employment. Although MSB employment had been in decline since 2015, most of this was regained in 2018. Scottish-owned MSBs make up 23% of the market, accounting for around half of all turnover and employment in Scotland. Since 2010 Scottish MSBs’ share of the overall number of MSBs has stayed around this level, but its share of turnover and employment has fallen. The growth in MSB activity in Scotland has been driven by the activities of foreign-owned MSBs; they are responsible for 80% of the growth in active MSBs, 79% of the total turnover growth and 122% of total employment growth (the presence of rUK MSBs declined over the period). Among Scottish MSBs, turnover is greatest in the wholesale and retail industry ahead of manufacturing and then construction. By a large margin, the greatest employer in MSBs is education, health and social work. Overseas owned MSBs are less likely to operate in locally traded industries, although a significant proportion of the growth in foreign-owned MSBs has been driven through these industries, such as administrative and support, as well as accommodation, food, information and communications as well as real estate. There was also significant growth in foreign-owned manufacturing MSBs, particularly their turnover. It is suggested that Scotland needs to develop more new and more larger MSBs.

No recommendations were made.