The Make UK/Civitas report, titled “The Growth Mission: A Blueprint for Scaling up SME Manufacturers,” published in partnership with the ERA Foundation, reveals that nearly two-thirds of manufacturing SMEs aim to grow into large businesses within the next 5-10 years.
The research shows that unlocking the growth potential of manufacturing SMEs could deliver an £83 billion boost to the UK economy and propel Britain from 12th place to 7th in global manufacturing rankings.
This isn’t just an abstract figure – it represents thousands of new jobs, stronger communities, and technological innovation that could transform Britain’s industrial landscape.
The UK has approximately 250,000 active manufacturing businesses, with 99% classified as micro, small, or medium-sized companies. These businesses form the backbone of our economy, yet many face significant barriers to growth.
“Small and medium-sized manufacturing companies are the lifeblood of the UK economy,” says Andrew Everett, CEO of the ERA Foundation. “In particular, the high-tech manufacturing companies that were the focus of this study have the potential to grow rapidly and deliver significant economic benefit.”
The research identified several key obstacles preventing manufacturing SMEs from scaling up:
Skills and Labor Shortages
The number one challenge cited by SMEs is access to skilled labor, including both engineering talent and leadership expertise. The report shows apprenticeship starts have declined by 42% since the Apprenticeship Levy’s inception, highlighting the urgent need for reform.
Finance Difficulties
Four out of five SMEs report struggling to access finance during critical seed to early growth stages. Solving these challenges could increase UK manufacturing investment by £9.2 billion annually.
Export Challenges
Only 22% of manufacturers are direct exporters. Many cite complex regulations and limited understanding of international markets as key barriers.
Awareness Gap
Perhaps most concerning is the lack of awareness of existing support programs. One-third of SMEs are unaware of the Business Growth Fund, while 37% don’t know about the British Business Bank.
The report recommends several key actions to help manufacturing SMEs reach their growth potential:
- Digital-First Support: Creating a British version of Estonia’s “Bürokratt” system to streamline business support and use AI to target relevant information to SMEs at the precise moment in their growth journey
- Financial Incentives: Introducing a super-growth allowance (150% capital allowance) and creating an enhanced Growth Enterprise Investment Scheme to stimulate investment
- Export Development: Implementing an Export Development Scheme to improve access to trade finance and expand Export Finance services
- Skills Reform: Improving accessibility to skills funding with the transition to the Growth and Skills Levy
The ERA Foundation remains committed to supporting high-tech manufacturing across the UK. Through our partnerships with industry, government, and educational institutions, we will continue working to implement the report’s recommendations.
“Many SMEs are oblivious of the support mechanisms available to them,” notes Everett. “The Government should work with industry to increase awareness so that the growth potential is realized.”
The full report, The Growth Mission: A Blueprint for Scaling up SME Manufacturers, is available on the Make UK website, and we encourage all stakeholders in the manufacturing ecosystem to read its findings.
By removing barriers to growth and providing targeted support, we can help unleash the tremendous potential of our manufacturing SMEs, securing Britain’s place as a global manufacturing leader for decades to come.
