How Important to the UK Economy is Private Equity & Venture Capital Investment?
Private equity (PE) and venture capital (VC) are often discussed in financial circles as drivers of innovation and corporate growth. But just how significant are they to the wider UK economy? A recent report prepared by EY for the British Private Equity & Venture Capital Association (BVCA) sheds light on the scale of their impact — and the results are striking.
A Major Contributor to Jobs and Growth
According to the report, in 2025 businesses backed by private equity and venture capital directly employ 2.5 million people across the UK. Collectively, these workers earn £91 billion in wages, with average annual earnings of around £35,600.
The economic footprint doesn’t stop there. These businesses generate £199 billion in GDP — equivalent to roughly 7% of the UK economy. Put another way, nearly 1 in 12 pounds of UK economic output can be directly linked to PE and VC-backed companies.
Growth That Outpaces the Economy
The importance of PE and VC has been growing rapidly. Compared to 2023, the number of backed businesses has risen by 5%, while employment has grown by 17%. GDP contribution has surged even faster — up 45% in just two years.
This highlights that private equity and venture capital are not just sustaining economic activity; they are actively accelerating it.
From Start-ups to Established Players
The report also distinguishes between venture capital and private equity investment:
Venture capital is focused on start-ups and early-stage businesses, often enabling innovative firms to get off the ground when traditional funding routes aren’t available. In 2025, VC-backed businesses employed around 378,000 people across more than 9,000 companies.
Private equity, by contrast, typically supports more established firms, helping them restructure, scale, or expand into new markets. These businesses are responsible for the majority of the employment and GDP impact, with around 2.2 million workers across 3,800 companies.
Together, PE and VC fuel both the dynamism of the start-up ecosystem and the resilience of mature businesses adapting to change.
Why It Matters
This contribution matters not just for investors, but for the UK’s wider economic health. PE and VC provide the capital, expertise, and strategic direction that help companies grow, create jobs, and drive innovation. From life sciences and technology to manufacturing and retail, their influence stretches across every major sector.
And while the EY and BVCA study focuses only on direct economic activity, the true impact is likely to be even greater once supply chains and consumer spending are factored in.
Conclusion
The evidence is clear: private equity and venture capital are not niche players in the UK economy. They are central pillars of growth, innovation, and employment. With 7% of GDP and 8% of jobs directly tied to PE and VC-backed businesses, their role is more important than ever.
As policymakers look to strengthen the UK’s competitiveness on the global stage, ensuring a supportive environment for private equity and venture capital will be critical.
To discuss the impact hiring the right leadership for PE & VC please reach out.
Jamie Waugh, Director and Head of Executive Search, Venatu Executive - jamie.waugh@venatuexec.com