For a change from the perpetual doom and gloom of the last few months we thought we’d look at the contribution family businesses make to the economy.
Three years ago Oxford Economics estimated that there were 4.8 million family businesses in the UK in 2020, making up 85.9% of all private sector businesses.
These businesses employed 13.9 million workers (51.5% of all private sector employment) and contributed £575 billion to the UK economy.
They therefore contribute a significant amount to the economy, tax revenues and employment.
Research has revealed that they contribute to local economies in many ways:
- Philanthropy
- Establishing foundations
- Volunteering
- Supporting learning and improving labour market access
- Enhancing employees’ contributions to communities through matching donations and organising community charity days
- Supporting business organisations such as Local Enterprise Partnerships
- Environmental action
The report found that as a result of family businesses often being passed through multiple generations, they have a “long-term commitment to a specific geographical place” that helps to “build trust with communities and other stakeholders” resulting in “being the bedrock of communities across the UK.”
The UK’s Family Business Research Foundation’s “State of the Nation” provides a bird’s eye view of the UK’s family business sector. The report, compiled by the Centre for Economics and Business Research (CEBR) in collaboration with the FBRF that family firms are not evenly distributed across the UK economy and there is considerable variation in the prevalence and economic contribution of family businesses by firm size, sector, region and country.
The report estimates that the UK had just over 5 million family businesses in 2023, accounting for 93% of all firms in the private sector. Of these, around 1 million had employees, and nearly 24,000 had more than 50 employees.
CEBR estimates that, in 2023, family businesses generated £2,805 billion in turnover (total revenue), almost half of the UK private sector total. The sector that made the largest contribution to family-owned business turnover nationally was the wholesale and retail trade sector, which generated £923 billion.
The total gross value added (GVA) of family-owned businesses was £985 billion, with large firms and businesses in the wholesale and retail trade sectors again being the largest contributors.
The FBRF’s latest report on the UK family business sector underscores the vital contribution family firms make to both regional and national economic growth.