Established SMEs decline fastest in rural areas, Allica Bank research finds

Established small and medium-sized enterprises (eSMEs) are declining fastest in rural areas, the very places where they support the largest share of jobs, according to a report by Allica Bank.

The bank’s analysis, based on the latest UK business counts data from the Office for National Statistics, found there are 592,500 established SMEs in the UK, employing 10.7 million people and generating 37% of private sector turnover.

Established SME numbers grew by just under 7% across the UK between 2016 and 2026, but London accounted for 44% of that net growth. Over the past three years, eSME numbers declined by 2.3% in the most rural local authority districts on average, while they grew by 1.2% in the most urban areas.

The bank said this pattern was particularly significant because eSMEs support 48% of jobs in rural areas on average, compared with 33% in the most urban areas.

The South West saw eSME numbers decline by 3.8% over the past three years, the steepest decline of any UK region, followed by Wales at 3.4% and the West Midlands at 3.1%. London and Northern Ireland were the only UK regions to record growth in eSME numbers over that period, with Northern Ireland seeing a rise of 0.2%, equivalent to 40 businesses.

At local authority level, Erewash recorded the steepest decline in established SME numbers, down 20% over three years, followed by Wyre Forest at 18%, Stratford-on-Avon at 17% and Blackpool at 16%.

The report also identified pockets of strong performance among established firms. Some 16,300 eSMEs recorded turnover growth of more than 20% in the past year, and 10,700 of these high-growth firms were located outside London.

Richard Davies, chief executive of Allica Bank, said the findings underlined the role established businesses play in regional economies. “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.”