The businesses propping up Britain's local economies are disappearing fastest where they are needed most

• A new Allica Bank report reveals that established SMEs (eSMEs) have the scale to drive growth in every part of the UK. 592,500 established SMEs employ 10.7 million people and contribute 37% of private sector turnover.
• The report shows that eSMEs are most at risk in the places they matter the most. Rural areas rely most heavily on eSMEs for jobs, yet these areas have experienced the most significant decline in eSME numbers in the past three years.
• eSMEs are a genuine source of growth, not a static backdrop. Around 16,300 eSMEs grew turnover by over 20% last year, with 10,700 located outside London.

Established SMEs (eSMEs) – businesses with 5 to 249 employees that are critical for sustaining local economies – are vanishing fastest in exactly the places that rely on them most, according to new research from Allica Bank.

The report, Good Growth Icons, finds that while the UK’s eSME population is larger today than it was a decade ago, growth has stalled in the past three years and is increasingly concentrated in London.

Between 2016 and 2026, eSME numbers increased by 7% across the UK, with London accounting for 44% of net growth.

But in the past three years all UK regions, with the exception of London and Northern Ireland, have seen eSME numbers decline, with Northern Ireland registering just 0.2% growth (40 businesses).

The South West recorded the steepest recent decline of any region, with its eSME base declining by 3.8%, followed by Wales (-3.4%) and the West Midlands (-3.1%).

📒 Read the full report – 'Good Growth Icons' – here.

Rural areas are most at risk to the recent decline in eSME numbers

The research – based on the Office for National Statistics’ latest UK business counts data – suggests that eSME numbers are disproportionately declining in the areas where they support the greatest share of jobs.

In the most rural local authority districts in the UK, eSMEs have declined by 2.3% in the past three years, compared with 1.2% growth in the most urban areas. These urban districts are three times more likely than rural districts to have experienced recent eSME growth.

Yet it is these rural areas that rely most heavily on eSMEs for employment, supporting 48% of jobs on average compared with just 33% in the most urban areas.

The report identifies certain local authorities that have experienced the sharpest decline in eSME numbers in the past three years, including Erewash (-20%), Wyre Forest (-18%), Stratford-on-Avon (-17%) and Blackpool (-16%).

Good growth in every postcode starts here

Prime Minister Andy Burnham has pledged to deliver "good growth in every postcode" and Allica Bank argues that pledge cannot be met without eSMEs.

The UK's 592,500 eSMEs employ around 10.7 million people and generate 37% of private sector turnover. The report estimates there are 16,300 eSMEs in the UK that grew turnover by over 20% in the past year and can make a meaningful contribution to future growth.

While these high-growth potential eSMEs are disproportionately concentrated in London, there are 10,700 outside the capital growing at such a rate as to fund significant local investment in all parts of the UK.  

To back them, Allica Bank is calling on the Government to take four steps:

• A Scale-up Guarantee: Create a new tier of the Growth Guarantee Scheme offering a 70% guarantee on facilities between £2 million and £5 million for high-growth firms that lack tangible assets.

• Support regional skills development: Fully devolve adult skills funding to Strategic Authorities and introduce a Growth & Skills Levy pool, with a focus on developing eSME AI skills.

• Reform business owner taxes: Reduce the cost of doing business for eSMEs and introduce an eSME Reinvestment Relief to encourage business reinvestment.

• Establish regional eSME Growth Forums: Give eSMEs a permanent voice with local leaders to identify barriers to growth and shape Local Growth Plans.

Richard Davies, CEO of Allica Bank, said:

"The Prime Minister has pledged to deliver 'good growth in every postcode', and established businesses can make it happen.”

“These firms are the engine of regional growth across the UK. They keep local economies running and communities thriving. They may not be the hyper-growth scale-ups that grab the headlines, but they sustain local jobs for decades, often in the very places national growth strategies overlook. We urge the Government to put established businesses at the heart of its growth agenda and its mission to deliver good growth in every postcode."

Notes to editors

1. 'Good Growth Icons' is published by Allica Bank. Established SMEs (eSMEs) are defined as businesses with between 5 and 249 employees.

2. Business count and employment figures are Allica analysis of ONS UK Business Counts data (September 2026) with ONS, Scottish Government and NISRA population statistics.

3. High-growth potential eSMEs are defined as those that grew turnover by over 20% between 2024 and 2025, sourced from DataGardener data, 2026.