Mid-market firms across the UK are outperforming larger and smaller counterparts, achieving double-digit turnover growth despite persistent inflationary pressures, according to a new study by accountancy and business advisory firm BDO.
Turnover Growth Outpaces Inflation
The BDO report, based on data from 1,000 mid-market companies (those with turnover between £50 million and £500 million), shows that average turnover rose by 12% over the past year. This growth rate is more than double the current inflation rate of around 6%, indicating real-term expansion. The sector now employs over 14 million people and contributes £1.5 trillion to the economy annually.
Drivers of Resilience
Key factors behind this resilience include strong domestic demand, investment in technology, and a focus on export markets. BDO noted that mid-market firms have been agile in adapting to supply chain disruptions and rising costs, with many passing on price increases to customers without significant loss of business. According to Kaley Crossthwaite, partner at BDO, “Mid-market businesses have shown remarkable adaptability, leveraging their scale to invest in innovation and talent while managing cost pressures.”
Challenges Ahead
Despite the positive outlook, the report warns that headwinds remain. Skills shortages, rising interest rates, and geopolitical uncertainty could temper future growth. More than 60% of respondents cited recruitment difficulties as a top concern, while 45% said access to finance for investment was a barrier. Crossthwaite added, “To sustain momentum, these firms need continued support from policymakers on skills, infrastructure, and access to capital.”
Regional Variations
The report also highlights regional disparities, with firms in London and the South East growing fastest (14% turnover increase), while those in the North East and Wales lagged behind at 8%. However, all regions recorded positive growth, underscoring the broad-based nature of the recovery.
Outlook
BDO forecasts that mid-market firms will continue to drive UK economic growth, with turnover expected to increase by a further 8-10% in the next year. This would significantly outpace overall GDP growth, reinforcing the sector's role as an engine of the economy.
