Britain’s hidden growth companies: the invisible middle
When the Chancellor delivers the Budget on 28 October, there will be plenty of attention on tax, spending, investment, and growth. But alongside the immediate debate about how much money is available and where it should be spent, there is a broader question about which businesses are capable of driving Britain’s economic growth.
The Government has made clear that it wants to increase investment outside London and support businesses capable of creating jobs and driving economic growth. John Healey has already announced a £150 million British Business Bank fund for high-growth firms in the North, alongside a new Northern 500 initiative for ambitious mid-sized businesses. The Government has also said it wants to double the number of UK unicorn companies.
These are significant interventions, but they raise an important question about how we identify the businesses that deserve investment and support. There is an understandable attraction to companies with exciting technology, large addressable markets and the potential to become billion-pound businesses. But in looking for the next big success story, are we overlooking a much larger group of businesses that are already making a substantial contribution to the economy?
These businesses are the ‘invisible middle’. They are profitable, ambitious companies that may employ dozens or hundreds of people, generate substantial revenues and have clear opportunities to grow. They might operate in manufacturing, engineering, professional services, logistics, construction, healthcare, retail, or any number of other sectors. They may never become household names or have any interest in becoming a unicorn, but that does not make their economic contribution any less important. The current investment market illustrates this point. UK equity deal numbers fell from 8,057 in 2021 to 6,197 in 2025, while investment became increasingly concentrated in a smaller number of large deals. The British Business Bank found that the ten largest fundraisings accounted for 23% of all smaller-business equity investment in 2025, the highest proportion since 2020. Much of this concentration is being driven by AI. AI companies accounted for 44% of all equity investment in UK smaller businesses in 2025 despite representing just 26% of deals.
There is nothing wrong with investing in AI. Britain needs innovative companies capable of scaling internationally, attracting significant investment and creating new industries. But when such a large proportion of capital is flowing towards a relatively small number of attractive companies, it is worth asking what happens to the businesses outside that spotlight.
The UK has thousands of businesses that are profitable, ambitious, and capable of growing but do not necessarily fit the investment profile currently attracting the most interest. Their ambition may be to expand into new markets, open additional sites, invest in new equipment or double their workforce rather than pursue a billion-pound valuation. Yet collectively, these companies represent a substantial part of the UK economy. SMEs account for 60% of private-sector employment and 51% of turnover. At the start of 2025, they employed 16.9 million people and generated an estimated £2.8 trillion in turnover.
Britain therefore cannot afford to think about growth solely through the lens of venture-backed companies and potential unicorns. The wider economy depends on businesses steadily expanding, employing people, paying taxes, investing, and supporting the communities in which they operate. There is a useful historical example. In 1969, Steve Ross acquired Warner Bros. The businesses that helped him build the capital to enter the media industry were decidedly not glamorous, including parking, rental cars, cleaning, plumbing, and flooring. They were profitable businesses that could be bought, improved, and scaled.
Economic value does not always come in the form investors are trained to recognise. A profitable manufacturing, engineering, healthcare, or logistics business may have strong growth potential without attracting the same attention or investment as a high-profile London technology startup.
This becomes particularly important as the Government seeks to use devolution to drive growth beyond London. There are encouraging signs that the geography of investment is changing, with the British Business Bank reporting increased equity investment in regions including the North West, South West, and Scotland in 2025. But moving investment geographically is only part of the challenge. We also need to think about how we define growth and which businesses we consider worthy of investment.
If growth continues to be defined primarily through rapid scaling, large funding rounds, technological novelty, and the prospect of a major exit, there will still be a substantial part of the economy sitting outside the frame.
The invisible middle does not necessarily want or need to become the next unicorn. Its ambition may be to double the size of the business over five years, open two new sites, employ another 100 people, expand into new markets or invest in new equipment and technology. Those objectives may not generate the same headlines as a billion-pound valuation, but they can have a very real economic impact when multiplied across thousands of businesses.
Business support should therefore be based on the contribution a company can make rather than simply how exciting its story appears. Investment decisions will always involve judgement and risk, but there is a strong case for looking more deliberately at businesses that have demonstrated profitability, ambition and the ability to create jobs and increase economic activity, regardless of their sector, location, or ability to produce a fashionable investment narrative.
The Budget will inevitably focus attention on how much money is available and where it will go. It should also prompt a discussion about how we identify the businesses that can make the greatest contribution to Britain’s economic future. Some will be high-growth technology companies and future global businesses. Others will be profitable, established companies operating quietly in business parks, industrial estates and high streets across the country.
We must not to lose sight of the fact that all of them need and deserve support.
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