Grant Thornton has published a report called the “Economic Impact Of AIM” commissioned by the London Stock Exchange.

AIM is the exchange’s stock market for small and medium size growth companies.

The report shows that since its inception almost 30 years ago, AIM companies have raised a combined £48 billion in equity capital at admission and followed this with further fundraising amounting to £87 billion.

However “wider macro conditions” are now presenting significant challenges with the total money raised by AIM companies falling by 71% between 2020 and 2023.

“Therefore, if the Government’s mission to support economic growth and in particular its desire to create ‘good jobs and productivity growth in every part of the country’ is to be delivered, thriving and growing private sector businesses will be critical,” said the London Stock Exchange.

“To make this happen, Government should enable a funding continuum and ensure the ongoing availability of targeted fiscal incentives, that helps companies to raise external finance throughout their growth journey – such as through AIM – and in doing so facilitate their growth.”

Marcus Stuttard, Head of UK Primary Markets & AIM, London Stock Exchange plc, said: “As a leading growth market, AIM plays a crucial role in the provision of long-term equity capital for growth and development, supporting more than 4,000 companies to raise nearly £135 billion, funding innovation, creating jobs and driving economic growth across the UK.

“Grant Thornton’s research highlights the importance of AIM for the UK economy and its impact on improving productivity and regional growth.

“Despite AIM’s importance to the UK economy, smaller quoted companies have been significantly impacted by outflows from UK equities in recent years.

“It is vital that we continue with the reform agenda currently underway to evolve our capital markets, which will encourage greater investment into AIM quoted companies and seek to protect the fiscal incentives that drive capital and liquidity to the growing companies of the UK.

“Together, these measures will contribute to the growth of our economy and, ultimately, deliver improved returns to our savers.”

Other key findings of the report include:

• In 2023, through direct, supply chain and induced impact, the overall economic impact of AIM to the UK economy was equivalent to £68 billion in GVA and over 778,000 jobs.
• AIM companies made a corporation tax contribution of £5.4 billion to the UK Exchequer.
• AIM companies are, on average, more productive than the national average with productivity of £87,100 GVA per employee compared to the national (UK) average of £58,327 and a London (the most productive region in the UK) average of £82,801.
• AIM businesses can play an important role in helping balance regional disparities. This is particularly the case where there are clusters of AIM companies in certain regions where productivity is lower such as the Midlands, Yorkshire, the North East and parts of Scotland and Northern Ireland, for these areas AIM companies are often important anchor institutions for the local economy.
• Between 2019 and 2023, AIM companies have consistently generated four-times as much of their revenue from overseas exports, compared to private company counterparts in the UK.

Philip Secrett, Partner and Head of Public Company Advisory, Grant Thornton UK LLP, said: “Despite an extended period of uncertainty, AIM continues to play an important role in supporting business growth and delivering notable economic value to the UK.

“Our analysis shows that in 2023 the economic impact of AIM companies was £68 billion and they supported over 778,000 jobs.

“Given the Government’s mission to support economic growth and productivity, consideration of the role that AIM is playing – and can continue to play – in achieving this mission will be vitally important.

“An important enabler of this growth has been Government support through the Enterprise Investment Scheme and other tax reliefs.

“Together these have provided a well calibrated package of support that incentivises investment. By committing to the ongoing availability of these targeted fiscal incentives and reliefs Government can help make future growth a reality.”