Coronavirus–hit family businesses in the financial services sector continue to be the backbone of the economy

The new IFB Research Foundation The State of the Nation: The UK Family Business Sector 2019–20 report published this week showcases the unwavering relevance and contribution of family firms.

In the financial services sector there are over 71,000 family businesses, making up 79% of private sector businesses and employing almost 300,000 people.

Country-wide, the report reveals family firms contributed £657 billion to UK GDP in 2018, 31 per cent of the UK’s total GDP.

Their contribution to the UK economy has continued to grow over the years, with £196 billion paid in tax to the Exchequer in 2018, around one quarter of the UK Government’s total revenue and almost twice the budget of the NHS in England.

The new report also provides a first of its kind glance at the impact of the ongoing Covid-19 crisis on the family business sector. It estimates that, between February and May 2020, family firms’ output is likely to have declined by 30.0 per cent.

Analysis by industrial sector shows that accommodation and food services businesses experienced the greatest loss in output, contracting by 91.7 per cent, while the 390,000 family firms in the arts, entertainment and recreation, and accommodation and food services sectors are likely to have been among those which have faced the largest challenges.

Sir Michael Bibby, Chairman of the IFB Research Foundation and of Bibby Line group, commented on the findings: “This report from the IFB Research Foundation provides important new information on the state of UK family business. It provides fresh insights into what family businesses do, how many people they employ, the impact they have on, and looks at how COVID-19 may have affected the sector.

As we look forward to recovering from the current crisis, it is too early to predict the full impact of COVID-19 on the UK’s economy and society. But the resilience and long-term focus of the UK’s family businesses means that they are sure to play a critical role in the economic recovery ahead.”

Elizabeth Bagger, Director General of the Institute for Family Business, said: “We know how important family businesses are in the financial services sector. They play a central role in the economy, employment, and equally importantly communities. We should all celebrate their remarkable history, and support them in continuing to grow and innovate.

The ongoing crisis has put our nation to the test and hit family businesses hard. Speaking to our members, we know how challenging this times have been and how hard they have been working to come out the other end as strong as possible. From history we know that many family businesses have been able to navigate through wars and crises, and their intrinsic long-term outlook and care for their people and communities have always provided a unique edge to their longevity. We have seen so many examples of family businesses supporting the national effort to tackle the virus, and continuing to support people and charities throughout the crisis, often in very innovative ways.

We have many reasons to be hopeful for the future and we certainly will continue to work hard at our end too to help family businesses succeed. It is essential that family businesses are front of mind as the Government looks to recovery and building long-term sustainable economic growth across the whole UK.”