New research highlights need to diversify UK business
Our latest report reveals that the UK suffers from a business monoculture – an economy dominated by firms that primarily exist to maximise profits, which encourages a short-term focus that can be damaging economically as well as socially and environmentally.
We reviewed evidence from the five largest economies in Europe and found that the UK is an outlier, with lower levels of investment and employment in the social economy. Social enterprises and cooperatives deliver 14% of GDP in the Netherlands, 12% in Germany and 10% in France, but our social economy is only worth around 3%.
The research shows that growing the social economy in Spain’s Basque Country and the Emilia Romagna region of Italy has increased GDP per capita and reduced inequalities. Overall, the data suggests that investment in people and capital tends to increase productivity, which in turn improves wages and living conditions. This means our European peers with bigger social economies enjoy higher wages and greater representation at work, while the UK struggles with weaker economic performance and lower working standards.
We can and must change this. Our calculations show that growing the UK social economy, from the current 3% of GDP to be more in line with neighbouring countries at 12%, could:
- boost UK investment by £14bn (around 1% of GDP per annum)
- raise average wages by up to £2,640 per worker
- secure the Living Wage for 400,000 more workers
- enable 75,000 more employers to train their staff
- give 4.2m workers a real say in how their employers operate
- improve work quality by widening access to initiatives like 4-day weeks and flexible working
- have significant spill-over effects longer-term on the wider national economy, such as boosting productivity and living standards.
Social Enterprise UK produced this report with support from the Alex Ferry Foundation.