Medium-sized companies are Britain's overlooked success story

Britain's medium-sized companies are outperforming both smaller and larger businesses and are one of the overlooked success stories of the economic recovery, research has found.

Their numbers have expanded by more than 5 per cent since before the 2007 financial crisis, outpacing the 1.6 per cent increase in larger companies and outshining the 0.9 per cent decrease in small businesses, according to the research by business advisory group Grant Thornton.

They are doing so with little official support, but their growth could be boosted further with more help to increase exports and close the skills gap, the research suggests.

Unlocking this potential is a big target for John Cridland, director-general of the CBI employers' group, and now Lord Livingston, the former BT chief who recently became trade minister.

Lord Livingston said there should be "a real focus" on helping midsized businesses "who don't export today who can, and who do export and for whom we can do more".

Fast-growing examples range from the Cambridge Satchel Company, which makes leather bags, to Scottish brewer BrewDog and restaurant operator Caffe Concerto.

Their total turnover was estimated at £712bn, up 7.5 per cent in 2013 - ahead of the 6.5 per cent growth for large businesses and 0.8 per cent for smaller ones.

Over the next 12 months, medium-sized businesses expect faster growth in turnover, exports and employment than the UK business population as a whole.

Grant Thornton calculates the UK mid-market comprises 34,000 companies of 50-499 employees, making up more than a fifth of private sector turnover. Its research was done in partnership with the Centre of Economic and Business Research, a consultancy.

"The biggest barriers for UK MSBs is actually appetite and strategy; they have got to want to grow, and they have got to get the partners to help them grow," Mr Cridland said.

He said the CBI was arranging export missions for medium-sized companies and running "M-clubs" around the country "so that the mid-market is no longer the forgotten army".

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A report last year by GE Capital showed that UK medium-sized companies were narrowing the gap in revenue growth with the Mittelstand, Germany's admired cadre of midsized businesses.

Grant Thornton said the mid-market was now Britain's most productive segment, with average turnover per employee 5.7 per cent above the UK average - slightly ahead of larger companies and 32 per cent better than smaller ones.

However, productivity lags behind Ireland, Austria, France and Germany. French midsized companies are 21 per cent more productive.

Only 29 per cent of UK mid-market companies have international operations, and just one in five expected to expand their international operations.

UK Trade and Investment, the government's trade promotion agency, pledged recently to boost support for 9,000 midsized businesses.

Grant Thornton calls for finance initiatives to be extended to midsized companies, a national insurance exemption for hiring apprentices and better official data on the mid-market segment.

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