Belfast Telegraph

Economy is suffering from lack of high-growth small firms

By Lesley Houston

Northern Ireland is lacking in the high growth small businesses which are powering economic recovery in other parts of the UK, it's been claimed.

The high-growth small business (HGSB) report published today by advisers Octopus Investments found the number of fast-growing firms had risen sharply across the UK in recent years.

But Northern Ireland could claim only 609 firms in the category - the lowest of all UK regions.

The next lowest was the north east of England which had 723, while Wales had 910.

The Federation of Small Businesses in Northern Ireland said small firms accounted for 98% of the economy in the region, but more could be done to make them grow faster.

FSB policy chair Wilfred Mitchell admitted: "A deeper and longer recession has left a more difficult environment within Northern Ireland for businesses to operate, compared to the rest of the UK."

Simon Rogerson, chief executive of Octopus Investments, said the report highlighted that fast-growing SMEs were "absolutely critical" to economic recovery and job creation in the UK.

"While it's clear that some areas of the country are benefiting from the remarkable contribution that HGSBs make, there is much more that needs to be done to nurture the growth of more fast-growing companies across the UK."

The report said more than two in every three new jobs were created by HGSBs around the UK between 2012 and 2013.

One in 25 workers in London were employed by such firms - compared to just one in 50 in Northern Ireland.

Octopus Investments said the information in the report was drawn from the Office of National Statistics, Companies House and the Bank of England.

High-growth small businesses were responsible for around 36.2% of UK economic growth last year but accounted for just 1% of businesses, the report said.

But in Northern Ireland, where there were fewer HGSBs, the economy grew by just 0.9%.

Areas with a more vibrant economy were able to lean on higher numbers of high-growth small businesses - and Octopus Investments said policymakers needed to act to improve the outlook for fast-growing small firms.

They called for an independent infrastructure commission to examine regional development issues and for skills shortages to be addressed through apprenticeships and retraining programmes.

Separate research by the Department of Enterprise, Trade and Investment earlier this year found that the number and rate of high-growth firms in the province had declined since 1998 - even though the business population as a whole had increased.

The number of high-growth businesses between 2010 and 2013 was 40% lower than the number between 1998 and 2001.

In fact, the high-growth rate had halved over the same period from 21% to 10%.

The west and south of Northern Ireland broadly increased its share of high-growth businesses while Belfast's share declined.

And the report, which was published in June 2014, said high-growth businesses were important to the Northern Ireland economy.

A relatively small number of businesses accounted for a disproportionate share of business employment and turnover.

For example, they contributed 30.8% to employment growth from 2010 to 2014, but accounted for only 1.3% of all businesses.

Belfast Telegraph