FSB report - Local economies benefitting most from SMEs

9th July 2013

New research from the Federation of Small Businesses (FSB) found 58 per cent more of the money spent by local authorities with small and medium-sized enterprises (SMEs) is reinvested back into the local economy compared to the figure spent on larger firms.
 
The exclusive report from the FSB and the Centre for Local Economic Strategies surveyed local authorities nationwide and found that in the last 12 months they forked out a total of £8.7 billion on goods and services in their local area.
 
Interestingly, the figures highlight how doing business locally is significantly better value for money, with small local firms generating £746 million more for the local economy when compared to larger local companies – despite having over £500 million less spent on them.
 
For every £1 spent on a small local business, 63p was re-invested into the local area, compared to 40p in every £1 spent on a larger local firm.
 
John Allan, national chairman of the FSB, believes investment in emerging local firms is of paramount importance nationwide.
 
"With budgets being cut there seems to be an increasing realisation that spending more locally will benefit the local economy," he said.
 
"The evidence speaks for itself. Spending locally invests in jobs and growth for the area. We want to see more of this happening across the country."
 
The FSB believes that if each authority spent an additional five per cent of their budget locally, committing just three per cent more of that pot to SMEs, an additional £788 million could be generated for local economies.
 
More importantly, the report demonstrates good practice throughout many of the responding local authorities, including 86 per cent of local authorities who chose to break contracts into smaller chunks in order to help SMEs secure work.

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