UK manufacturing SMEs could boost GDP by GBP £83bn if scaled up

Recent research indicates that UK manufacturing SMEs could add up to GBP £83 billion to national GDP if they scale successfully, but significant obstacles remain in their path.

A study conducted by Civitas in collaboration with Make UK has highlighted the potential economic impact of small and medium-sized manufacturers if they can transition into mid-sized or large businesses. Currently, over 60% of manufacturing SMEs in the UK are looking to scale, but many face operational and strategic barriers which may hinder their growth.

Michael Gould, the founder of the business planning platform Kaleidoscope.com, has responded to these findings by calling for a shift from policy discussion to tangible action. Having led several scale-up projects and built multiple technology companies, Gould emphasises that ambition alone will not deliver the scale required to achieve economic gains.

He believes that many manufacturers are constrained by their use of traditional planning methods, limited access to suitable funding, and a lack of strategic oversight. In his view, enabling sustainable growth requires modernising the planning and forecasting processes that underpin business decision-making.

"SME manufacturers are some of the most resilient, inventive and hardworking businesses in the UK. They've weathered Brexit, supply chain shocks, labour shortages, and an energy crisis. And yet, many still plan their futures using fragile spreadsheets, siloed thinking, or blind optimism," said Gould. "That simply isn't good enough when we're talking about unlocking tens of billions in economic value."

The Civitas and Make UK report contends that, should even a portion of these SMEs succeed in scaling, the UK could rise from being the 12th to the 7th largest manufacturing economy worldwide. Nevertheless, the report also warns that these ambitions could falter without practical support structures in place.

Gould posits that the fundamental barrier to scaling is not only related to the availability of finance, but fundamentally to the lack of effective forecasting and scenario planning. He argues that business owners are often equipped with ambition but lack clarity on how different growth strategies will play out.

"Most business owners don't lack ambition, they lack clarity. They might have a dozen gut instincts about how to grow, but no safe, structured way to test those assumptions," he said. "That's why so many growth plans stay stuck in limbo, especially in sectors like manufacturing, where the stakes are high and the margins tight."

Kaleidoscope has developed a platform that provides a collaborative environment for forecasting, enabling manufacturing leaders to model scenarios and test decisions against various potential economic scenarios. The system is intended for users without specialist financial expertise, prioritising usability to support effective planning.

"Our goal isn't to make planning look fancy, it's to make it useful," said Gould. "You should be able to see what happens if your material costs rise by 12%, if your energy bill doubles, or if you bring in a second production shift. The answers should be available to you instantly, not buried in ten tabs and a formula error."

However, Gould acknowledges that digital tools alone will not address all obstacles to scaling. He advocates for a comprehensive approach that includes funding access, peer mentoring, and ongoing government commitment to the sector.

"The UK has spent the last decade trying to become a start-up nation. But it's scale-ups that drive real economic transformation," he said. "And in manufacturing, scaling is capital-intensive, talent-driven, and strategically complex. That means we need more than slogans, we need proper support systems."

His recommendations extend to the need for funding solutions that go beyond early-stage start-up capital and encompass scale-stage businesses. Gould also advises that mentoring should come from individuals with direct operational experience and that case studies of best practice be made widely visible to aid peer learning. He emphasises the importance of timely intervention, particularly in light of current policy discussions on industrial strategy, post-Brexit competitiveness, energy efficiency, and reshoring.

"The next 12 months could define the next decade for British manufacturing," said Gould. "If we help these hidden champions scale now, we could lock in a stronger, more resilient economy. But if we miss the moment, we'll continue to lose talent, contracts and ideas to overseas markets."

Kaleidoscope is currently trialling its platform with a select group of manufacturing firms. While Gould is measured about the impact of technology, he notes the distinct advantages that effective planning can offer to SME leaders.

"Confidence is the biggest growth lever no one talks about," he added. "When you know the numbers, when you can test your thinking safely, when you can see the road ahead clearly, that's when you're able to scale with conviction. And that's what we're trying to give back to these businesses."

As wider national debates about growth and productivity continue, Gould underscores the importance of realising the identified economic potential in manufacturing, warning against complacency.

"There's a real opportunity here to shift the narrative," he said. "It's not just about rescuing UK manufacturing. It's about reinventing it, on smarter, stronger terms."