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Punching above their weight? The contribution of small- and mid-cap quoted companies to markets, employment and tax revenues

Back in May 2019, Hardman & Co and the Quoted Companies Alliance jointly published a paper looking at the importance of small and mid-size quoted companies (SMQCs) to the markets, and their contribution to tax revenues and employment in the UK. This is a poorly researched area, and that paper helped frame the debate; it has been quoted from by bodies such as the City of London Corporation.

Three years have passed since that note, and we felt it was time to update the work. Of course, the economic and business conditions in which we find ourselves today are very different from the pre-pandemic world of 2019. This makes comparisons between then and now particularly troublesome. Nevertheless, we felt the time had come for a review.

Politicians and business leaders often refer to SMQCs as being pivotal to the future of the British economy, but the definition of “small and mid-size” can cover a huge range of companies, and the difference between the UK’s largest companies and the rest is stark, as we present in this paper.

In particular, we examine the companies quoted on the UK’s public equity markets to highlight the difference in size between the largest 100 companies and the rest.

We also present data that show the massive contribution that SMQCs make to our society, in terms of employment and tax revenues, and to the stock market.

We have also looked at the net change in the number of employees. It is important to understand this, as there are distinct benefits for the individuals themselves and the wider society when employees work for public companies. Alignment of staff with a company’s business objectives and, increasingly, alignment of a company’s ESG performance with employees’ expectations can better be achieved in the public gaze, with the advantages that, for example, share schemes and transparency can bring. We believe that this is the first time anyone has sought to explore the continuing fall in numbers of companies on the stock market by expressing this in terms of workforce numbers.