Two million jobs backed by private equity and venture capital, new independent study shows
- Private capital backs two million jobs in the UK, or 6% of total UK jobs, a new independent report finds.
- Further job creation expected in all regions of the UK, as report finds over 50% of private capital-backed jobs based outside of London and England’s South East
- Study formally launched at British Engineering Services, with sites in Manchester and Warrington – one of the many businesses in the region to benefit from investment
Two million jobs are supported by private capital in the UK, around 6% of all UK jobs, according to a new independent study published today.
Additionally, almost two million jobs are also indirectly supported in the supply chain and through consumer spending – making the value of private capital to the UK economy even clearer.
The role of private equity and venture capital has come under intense scrutiny in recent years following a series of high-profile transactions, but the findings of a study from The Ernst & Young LLP (EY) QUEST (Quantitative Economics and Statistics) practice - commissioned by the British Private Equity and Venture Capital Association (BVCA) - has found that the sector plays a vital role in the growth of the UK economy.
The report also found that private capital backed businesses were worth just over £100 billion to the UK economy, around 5% of UK GDP.
The study goes on to illustrate that jobs backed by private capital are spread across the UK, with more than half based outside of London and England’s South East. The North West of England is home to the largest amount of private capital backed jobs (171,000) outside the capital and the South East.
The study was launched at British Engineering Services’ Paul Forrester Training Centre in Warrington. British Engineering Services, which tests, inspects and certifies businesses for their safety, had the potential to grow but needed additional funding. Following the long-term investment by Inflexion, a mid-market private equity firm and BVCA member, it has been able to grow its workforce by more than 380 people, invest in its IT and sales systems and more than double its turnover.
BVCA Director General, Michael Moore, said:
“Private equity and venture capital matter to the UK economy. We support 6% of all UK jobs – and we have the potential to grow many more in all parts of the UK. Private capital plays an essential role in the growth of regional economies – a vital partner to firms in towns and cities across the UK.
“When a business backed by private capital succeeds, so do its investors and the community in which it is based. Growing businesses mean more jobs, more successful firms and more prosperous towns and regions. Take British Engineering Services, where we launched this report. Without support from private equity, it would not be where it is now, with hundreds more staff, serving 30,000 customers across the country.”
Chris Wright, Partner at Inflexion said:
“18 years ago Inflexion opened its Manchester office to focus on the ambitious founders and companies in the North West and beyond. The entrepreneurial spirit and leading universities in the North West, alongside increased regional investment and improved infrastructure, has made the region the second largest hub for private capital in the UK.
“Accordingly, last year was a record for investments and exits in our Manchester team. And we expect the coming years to be just as successful as the North West continues to go from strength to strength.”
Economic Secretary to the Treasury, John Glen said:
“I welcome today’s report from the BVCA demonstrating the crucial role venture and private capital is playing in supporting the government’s mission to create jobs and level up across the UK.
“We are supporting investment through a range of initiatives including Venture Capital Trusts, the Seed and Enterprise Investment Schemes, and R&D tax reliefs - while also having the lowest rate of corporation tax among the G7.”
Private capital’s impact felt nationwide
The study by EY goes on to show that, after the North West, the regions with the greatest number of private capital backed jobs in the UK were the East of England (147,000 jobs), Scotland (133,000 jobs), and the West Midlands (127,000 jobs).
The importance of private investment in the economies of Wales and Northern Ireland was also made clear in the report, with 60,000 and 38,000 jobs in businesses backed by private equity and venture capital in each nation respectively.
In 2021, private capital backed businesses included more than 9,600 UK companies. In total, the report found that these businesses, their suppliers, and the related consumer spending, supported close to 4 million workers earning more than £110 billion, contributing over £200bn to UK GDP in 2021.
Nationally, the wholesale and retail trade sector accounted for the largest share of jobs backed by private equity and venture capital, with 453,000 jobs. Personal services, which includes sectors like hospitality, employed the second largest, with 414,000 jobs, roughly a fifth of total jobs backed by private capital. Transportation, information, and utilities came in third, with 377,000 jobs backed.
Image 1 - Direct economic contribution of UK private equity and venture capital backed businesses in 2021, by nation and region Thousands of jobs | Proportion of total UK jobs
Image 2 - Direct economic contribution of UK private equity and venture capital backed businesses, 2021
Image 3 - Total economic activity of, and related to, UK private equity and venture capital backed businesses, 2021
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Notes to editors
- Measuring the contribution of private equity and venture capital to the UK economy in 2021, was commissioned by BVCA to provide objective insight into the economic activity of, and related to, UK companies supported by private equity and venture capital firms within the UK economy in 2021.
- You can read the full report, and access details on EY’s modelling approach here.
- EY’s analysis does not include the related activity of private equity firms and venture capital firms themselves. The estimates provide a snapshot of the economic footprint of economic activity supported by private equity and venture capital investments as measured by employment, employee earnings, and gross domestic product (GDP) in 2021.
- Throughout the report, any reference to economic activity supported by private equity and venture capital firms relates to the United Kingdom alone.
About the British Private Equity & Venture Capital Association
The BVCA, as the representative body for private equity and venture capital, connects institutional investors, fund managers, companies, advisers and service providers together, with our membership currently comprising more than 700 businesses from across the private capital ecosystem. This includes more than 325 PE and VC firms, 100 institutional investors and 220 professional services firms.
Private capital drives growth – providing the funding, expertise and long-term view that enables companies to innovate and flourish. Our mission is to advocate the transformative nature of the private equity and venture capital community.
About British Engineering Services
The British Engineering Services Group is an industry leading testing, inspection, certification and asset reliability company with a team of more than 950 people and a heritage that dates back more than 160 years. The safety focused company has enjoyed year on year growth since it formed as an independent business in 2015. Helping make sure their customers leave nothing to chance is their number one priority and that will never change.
British Engineering Services is a Private Equity backed company having partnered with Inflexion, leading mid-market Private Equity firm, since its formation.
For more information about the British Engineering Services Group, visit their website https://www.britishengineeringservices.co.uk
