Family firms to contribute £218bn a year to UK economy by 2018
16th April 2014 | News
The value of family-run businesses to the UK economy is expected to reach £180 billion in 2014, with new research indicating that figure could soar to £218 billion in four years.
A new Barclays Business report has found the number of first-generation family-run SME has reached 2.42 million – the highest figure post-recession.
The value of family SMEs, across all industries, to the UK economy is greater than that of the overall manufacturing, wholesale or retail sectors and creates 5.5 million jobs in the UK – a figure which is set to rise to six million in 2018.
Rachel McNeil, director at Barclays, said: “We believe the end of the recession is paving the way for dynamic family firms who want to run businesses they are passionate about.”
However, a recent study by PricewaterhouseCoopers (PwC) found the survival of these family businesses comes under threat when they are passed down from first to second generation family members.
Their report into 200 next-generation family members, titled ‘Bridging the gap: Handing over the family business to the next generation’, found that 86 per cent of respondents wanted to do something “significant and special”, and 80 per cent have big ideas for change and growth.
However, Sian Steele, partner at PwC, said that, unlike public companies, family-run firms can have the same chairman for decades, which can prove a barrier to change for the younger generations new on the scene.
“The world has changed since the current generation took over, and the pace of change can only accelerate in response to global megatrends like demographic shifts, urbanisation, climate change and new technology,” said Steele.
“Members of the current generation often comment that their children aren’t sufficiently entrepreneurial and aren’t prepared to put in the long hours they did to build the business; while down the hall their children are wishing their parents would embrace the possibilities of new technology, and be more receptive to new ideas.”