MSBs are the engine of UK economic growth - CBI Director-General

The CBI Director-General, Carolyn Fairbairn, will today (Tuesday) make the case for backing Britain’s medium-sized businesses (MSBs) to help propel Britain back into the economic fast lane. Providing 1 in 6 jobs and generating a quarter of revenue in the private sector, MSBs are the UK’s economic engine and helping more to succeed will play a big part in overcoming the country’s productivity challenges.

In a speech to the CBI’s MSB Summit, sponsored by Lloyds Banking Group, she will also launch a new report – Be More Magpie – a practical guide for MSBs. It will set out how businesses can behave more like magpies, picking the best tried and tested technologies available – rather than like ‘ostriches’, who are more stuck in their ways, to raise their productivity and competitiveness.

On why MSBs matter, Carolyn will say:

“If the UK economy were a car, MSBs would be its engine. They make up only 2% of firms in the UK, yet they provide 1 in every 6 jobs, and generate nearly a quarter of private sector revenue.

“And right now, we need our engine working at full throttle because it’s no secret that the UK economy isn’t growing as fast as most of us would like.”

On the UK’s productivity challenge, Carolyn will say:

“Let’s take this as a challenge and an opportunity. Today is about how we shift the economy up a gear and get into the fast lane.

“I increasingly think the greatest obstacle to high productivity isn’t practical, but cultural. When people talk about ‘digital transformation’, many hear: job losses and the rise of the robots.

“People who think we are moving too fast. Yet digital technologies are changing the way we do business hugely for the better.

“So, I want to say to the people worried about the pace of change: I’m worried too. But my worry isn’t that we’re moving too fast. It’s that we’re not moving fast enough. By comparison with the best, the UK is running a slower race.

“On technology adoption, the UK is nearly a decade behind the Danes and other leaders.  With technology like e-purchasing for instance, we are only now achieving the same adoption levels that the Danes achieved back in 2009.

“So we need to catch up and leapfrog.”

On adopting the tried and trusted technologies of today, Carolyn will say:

“Believe it or not, magpies are the best kept secret solution to our productivity problem.

“Magpies are the firms that adopt the technologies and best practices that are proven to lift productivity and pay. We’re talking about the basics on which the cutting-edge can then be built.

“We have many magpies in this country and I suspect many in this room. But we don’t have enough.

“If we had more, it would be transformational for our economy. They’d not only be able to focus more on their core business, they could save hundreds of hours in admin and collectively, deliver a £100 billion plus uplift to the UK economy.”

On business working with the Government, she will add:

“The business voice matters and should be welcomed. Facts ignored today mean jobs lost tomorrow. It is firms who employ people, understand business risk and have the best insight into how the UK can grow.  Their evidence is not inconvenient, it is essential to avoid an ideological approach to Brexit that could harm British prosperity. The world knows the UK as a great place to do business - together we can and must keep it that way.

“Government has a vital role to play in helping to create more magpies. We warmly  welcome the government’s ‘Business Basics’ programme which helps small and growing companies adopt new technologies.

“However, there are three areas where government could do even more. First, by making improving the productivity of SMEs the main goal of the Shared Prosperity Fund. Second, by subsidising business advice for SMEs. And third, by giving SMEs a way to compare all this new technology before they adopt it. Think Trip Adviser for business technology. Tech Advisor perhaps.

“This will be a particular boost for medium-sized firms. It must not get swamped in bureaucracy and it must be led by business to get the best outcome. If government and business work together, we can give more oxygen to our medium sized businesses and the huge contribution they make to our economy.

“And more than that, we can give them - and their world-leading talent - the chance to excel in the global economy for years to come.”

The CBI report sets out five ideas to make companies more innovative, ‘MORE MAGPIE’:

1. Diagnose the problems and opportunities so you know what you want technology to deliver

2. Engage your suppliers – how can they help you solve the problem?
3. Be cautious about customisation – employ an 80:20 rule for technology

solutions

4. Involve your people in the process
5. Tap into your networks – talk to others about how they’ve addressed the challenge

Other partners for the CBI’s MSB Summit include Sage, Blake-Morgan and Newable.