SME manufacturers could give UK economy a £83bn boost
4 March 2025 
Almost two thirds of the UK’s SME manufacturers want to grow into large businesses, which could contribute £83bn to the country’s manufacturing GVA (gross value added) over the next decade, propelling the UK from the world’s 12th-largest manufacturing to the 7th-largest, according to a new report from Make UK and Civitas.
But the report warns that many manufacturers are unaware of support schemes designed to help them to grow. A third of SMEs do not know about the Business Growth Fund, while 37% are unaware of the British Business Bank. If more SMEs were to take advantage of these schemes, investment by Britain’s manufacturers would rise by £9.2bn, the report estimates.
The 73-page report, The Growth Mission: A Blueprint for Scaling up SME Manufacturers, calls on the Government to drive growth by introducing a 150% capital allowance and by creating an enhanced Growth Enterprise Scheme (GEIS) to turbocharge the SMEs. Such tax reliefs would encourage the businesses to reinvest in their growth, raise productivity, and adopt new technologies, helping them scale-up, create jobs, and assist in achieving the government’s growth goals.
An estimated 99% of the 250,000 active manufacturing businesses in the UK are micro and small-to-medium sized companies. The report reveals that four out of five them struggle to access finance during the “make or break” early stages of investment.
Current support for SMEs comes mainly from The Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS). Both of these government initiatives are intended to encourage investment in small and early-stage companies by offering tax reliefs to investors, but the businesses must be less than seven years old to access them.
However, setting up a factory and recruiting and training staff often takes more than seven years, so most start-up manufacturers are never in a position to access the funds designed to help them grow. Removing the seven-year limit would open-up the potential for investors to consider manufacturers with scale-up potential to access capital that was not available previously.
Exporting into new markets is also difficult for SMEs, limiting their scale-up potential. If the government is to achieve its aim of being the fastest-growing G7 economy, the UK will need to increase its exports. At present, 22% of manufacturers export directly.
According to the Make UK/Civitas research, 38% of SMEs say a lack of understanding of local regulations and bureaucracy is preventing them exporting, while 36% say they need better communication from government to improve their awareness of export advice and export finance support.
The report suggests that the UK Government should learn from Estonia, where all government services are provided through an AI-enabled online portal. This would also allow data collected by HMRC and ONS to be used to target companies with information about support schemes.
“Using AI to leverage the wealth of data available in the UK to micro-target SMEs at exactly the right moment of their growth journey, where they will be most receptive to and benefit from the types of support to boost scale-up success will dramatically deliver quick-fire growth across the whole of the UK,” suggests Make UK CEO, Stephen Phipson. “Small and medium sized businesses already play a significant part in contributing to growth but, with the right support, they could do even more. Helping these firms to export and use data to pinpoint growth potential could result in huge dividends for the economy.
“To boost SME exports,” he adds, “Government should introduce an Export Development Scheme to improve access to trade finance and expand Export Finance services to incorporate additional risk management support. Business awareness is at an all-time low and a lack of awareness is the greatest barrier to SME engagement.”
Other barriers to growth identified in the report include difficulties in adopting automation and a lack of access to skilled labour – particularly skilled engineers and employees with leadership skills. Around 41% SMEs are seeking information/advice on adopting digital technologies/automation, while 43% want better support for apprenticeships to train the next generation of engineers and technicians. This shows why government must improve accessibility to skills funding with the transition to the Growth and Skills Levy, the report suggests.
Civitas: X
