Home Business NewsBusiness Top firms have increased their dominance of the UK economy this century

Top firms have increased their dominance of the UK economy this century

by LLB Reporter
26th Jul 18 7:23 am

Britain’s 100 biggest firms now account for nearly a quarter (23 per cent) of total revenue across British business, up by 25 per cent since 2003-04, according to a new report published today (Thursday) by the Resolution Foundation.

With politicians from across the political spectrum debating the state of British capitalism, the report – Is everybody concentrating? – is the first detailed examination in over a decade of whether corporate power across the economy has become more or less concentrated among a small number of firms.

The Foundation says that changes in the market power of leading firms matters for other businesses and for living standards. When a small number of firms dominate a market, those firms can in some circumstances have greater price setting power (leading to higher prices) and greater wage setting power (leading to lower pay). While overall profits as a share of the UK economy have not grown significantly, there is evidence that the very biggest firms have been able to increase their profits in recent years, by 20 per cent since 2003.

Is everybody concentrating? shows that the revenue concentration of firms in the UK has increased since the early 2000s. The UK’s top 100 firms accounted for 18.5 per cent of total revenue in 2003-04. This grew in the run-up to and wake of the financial crisis, peaking at over 25 per cent of total revenue in 2010-11. It has since fallen back slightly to 23 per cent, leaving the share of economy-wide revenue held by Britain’s leading firms up by a quarter in just 15 years. Whether this fall continues, or is simply a one-off unwinding of the impact of the financial crisis, remains uncertain.

The report shows that firm concentration has been rising across a broad range of sectors and that some of the most concentrated sectors have also become a bigger part of our economy. One of the biggest increases has taken place in the fast growing gambling sector where the revenue share taken by the top five firms has increased by 17 percentage points since 2003-04 (from 68 per cent to 85 per cent).

Other key sectors where firm concentration has increased include general retail (our major supermarkets) where the top five firms’ revenue share has increased by 11 percentage points since 2003-04 (to 74 per cent overall), and clothing retail (up 17 percentage points to 53 per cent).

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