UK mid-sized businesses held back by ‘conversion gap’ – NatWest Mid Market report
Britain’s mid-sized businesses generate around £1.2tn in turnover and employ 7.3 million people, yet many are being held back by a “conversion gap” that is preventing them from turning ambition into growth, according to a new report from NatWest Group.
Published today and launched at an event attended by more than 70 mid-market NatWest customers and Lord Leong, minister for small business and enterprise, The Middle Speaks: narrowing the mid-market conversion gap through technology, talent and trade finds that mid-market businesses, defined as those with turnover of £10m to £100m and/or 50 to 500 employees, are often overlooked by support designed for smaller firms or large corporates.
The report argues that mid-market businesses represent one of the UK’s greatest growth opportunities. Despite creating jobs, driving innovation, strengthening supply chains and supporting local communities across the country, the segment remains relatively underserved and not well understood.
As the UK’s number one bank for mid-sized companies, NatWest Group supports more businesses in this segment than any other UK bank and sees first-hand the contribution they make to local economies, employment and growth.
The report describes a “conversion gap” in which mid-market firms have proven commercial potential and greater capacity than smaller businesses, but often lack the specialist skills, leadership capability and organisational resources available to larger companies. NatWest Group says this gap is most visible across the three Ts of technology, talent and trade.
Key findings
- Talent is the most immediate constraint: 55% of mid-market firms identify talent and leadership development as a top barrier to growth, while 42% say recruitment and workforce capability are the economic challenge most likely to constrain expansion.
- AI adoption is rising, but firms are struggling to scale: Up to 72% of firms who are currently using AI have adopted at least one core AI tool, but up to two-thirds of users have not fully deployed these products across their business.
- Trade challenges facing the mid-market are widening the conversion gap: Many mid-market firms have established international relationships with ambitious plans to grow into new markets. However, they often lack dedicated customs, legal, and compliance teams, as well as geopolitical expertise and supply chain flexibility.
Five actions to unlock mid-market growth
- Develop a dedicated Mid-Market Growth Framework to close gaps in existing provision and give firms coordinated access to support.
- Ringfence funding for a mid-market AI Adoption Accelerator to help businesses move from experimentation to strategic deployment.
- Launch a Mid-Market Leadership Capability Programme that builds on existing initiatives and equips leaders to scale and deliver business-wide transformation.
- Build an employer-led growth and skills system that aligns training and technical education with regional and mid-market workforce needs.
- Cut the cost and complexity of international growth by reducing administrative and trade barriers and improving access to end-to-end export support.
Paul Thwaite, chief executive of NatWest Group, said: “Mid-market businesses already make a significant contribution to the UK economy. They are one of the UK’s greatest growth opportunities, but too many are held back because, despite having distinct needs, the segment is often overlooked. As the number one bank for mid-sized companies, we have the specialist expertise, local knowledge and financing capabilities to help mid-market customers address the challenges they are facing and reach their full potential as growth engines of our economy across every nation and region of the UK.”
Lord Leong, added: “The UK’s mid-market businesses are central to our mission to grow the economy, supporting millions of jobs and bringing investment to local communities. We are working closely with businesses and industry leaders to remove barriers, strengthen skills and help more firms adopt new technology and reach international markets.”
Irene Graham OBE, CEO, ScaleUp Institute, said: “The mid-market does not lack ideas or appetite—it lacks a system designed around the challenges firms face as they get bigger, become established, and continue their drive for growth. They still need the support to grow in accessing the expertise, skills and export services that can turn proven potential into sustained scale.”
NatWest Group says government, industry and regional partners must work alongside mid-market businesses to better understand the barriers they face and ensure support is delivering stronger productivity, skills and export growth.
Through the Mid-Market Growth Council and a network of 11 Mid-Market Champions across the UK’s nations and regions, NatWest Group is helping ensure the segment has a stronger voice in policy discussions and better access to the support needed for growth.
The initiative forms part of NatWest’s Growing Together plan which champions mid-sized businesses and backs powerful regions by highlighting the role mid-market firms play in driving regional and national economic growth.