According to recent research conducted by Credit Suisse, family owned business have been largely neglected by UK policy despite their vital contribution to the UK economy.

The UK is lagging behind the rest of Western Europe as family businesses make-up only 8% of British companies. In contrast, Germany and France have a much higher proportion of family run companies, with 36% and 30% respectively.

The authors of the report say that an increasingly diverse ethnic mix is playing an important role in the growth of family-owned companies as 66% of ethnic minority businesses are family owned.

One difficulty face by founders is retirement. In the UK, 42% of these entrepreneurs say they have no fixed succession planning for when they retire and for those who have, only 27% plan on keeping the business in the family. Only 16% of such enterprises have been family run for three or more generations.

Despite this, the report suggests that family firms are lagging behind in business survivorship rates because they are more likely to take a long-term and less aggressive view of business development.

Michael O’Sullivan, head of UK research for Credit Suisse’s private banking businesses, said: “UK plc needs to realise the importance of family-owned firms to the economy.” He added that the UK would be “well-advised to follow its European neighbours’ lead.”

“Ultimately, one of the reasons for the relative stability of larger economies in continental Europe is the significant presence of family businesses which, at least on a stylised basis, tend to be less leveraged and generally have a longer-term focus on investment and innovation,” O’Sullivan concluded.

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