Women-led businesses could add £54.5bn to the UK economy if they were scaled at the same rate as their male-led counterparts, according to new data from Women Are Good Business, powered by The Gender Index. The same analysis suggests the Treasury would gain an extra £20.7bn in tax receipts every year — a sum that would represent a structural shift in public finances rather than a marginal improvement. Yet despite this potential, the businesses women build remain systematically overlooked by investors and policymakers alike.
A decade of underperformance
The UK economy has struggled to regain its footing over the past ten years, underperforming its peers as a series of shocks have taken their toll. The Covid-19 pandemic triggered an unprecedented contraction of 19.4 per cent in GDP between April and June 2020, and while the headline numbers recovered, economists estimate the crisis may have permanently lowered the level of GDP by around 2 per cent. The 2022 energy crisis added further pressure. Brexit has imposed a longer-term drag: by 2025, GDP per capita was estimated to be 6–8 per cent lower than if the UK had stayed in the EU, while business investment was 12–18 per cent lower by 2023–24 and employment around 4 per cent below the counterfactual. Most recently, the Iran war has disrupted oil and gas supplies, driving up energy prices and forcing forecasters to cut UK GDP growth predictions for 2026, with some expecting as little as 0.4 per cent. A thinktank has warned of a potential £35bn economic hit and the risk of recession; unemployment rose unexpectedly to 5 per cent in the three months to March 2026 and job vacancies tumbled to a five-year low.
The scaling gap
It is against this backdrop that the data on women-powered businesses becomes urgent. The headline finding from the Gender Index analysis is stark: if women-led companies grew at the same rate as those run by men, an additional £54.5bn in revenue and £20.7bn for the Treasury could be unlocked each year. But the numbers also reveal precisely where the growth stalls. At the micro level, women hold their own — 22 per cent of businesses with 0–4 employees are women-powered. By the time companies reach 101–200 employees, that share has fallen to 13.3 per cent. At 301–400 employees, just 11 per cent are women-led. Closing this scaling gap in the critical mid-growth zone — companies with 51 to 200 employees — could create nearly 390,000 jobs, the kind of productive, growing businesses that regional economies could be built on.
An overlooked opportunity
The case for backing these businesses is supported by their performance. Female-led companies generate average revenues of £10.4m, compared with almost £6.1m for male-led firms. They deliver 35 per cent higher returns on investment, achieved through greater capital efficiency, lean operations and targeted, customer-led solutions. Yet less than 2 per cent of venture capital funding reaches all-female founder teams. In 2022 alone, all-male founder teams raised £6.5bn — more than three times the amount raised by all-female teams over the entire past decade. The disparity is even more extreme for ethnic minority women, who receive just 0.02 per cent of total venture capital investment.
This is not a problem of performance. It is a structural mismatch between a funding system that rewards quick exits and capital events and the businesses women build. Research shows women-led companies are built for longevity: they reinvest profit rather than extracting it, and they grow at a pace that prioritises resilience over the short-term gains that venture capital romanticises. In a country that has spent decades lurching between short-termism and stagnation, these are precisely the enterprises that provide the stability needed to underpin the economy. Yet the system is designed around the clean exit and the founder cashing out. It does not reward sustained value creation.
Policy prescriptions
Parliament has already done the detailed work on what needs to change. In 2025, the House of Commons Women and Equalities Committee published its examination of female entrepreneurship, calling for a dedicated Female Enterprise Investment Scheme with higher incentives to drive funding into women-led businesses, a new Office for Women’s Business Ownership, and a 10 per cent public procurement target for women-powered companies. Several government-backed initiatives are already in place: the UK Export Finance Female Founder Export Accelerator, the Women’s International Networking Programme, Innovate UK’s Women in Innovation Awards, and the Invest in Women Hub, which offers mentorship and networks. The British Business Bank has committed to invest £400m from 2026 to support diverse fund managers, with an additional £50m for female-led venture capital funds. The industry-led, government-backed Invest in Women Taskforce has delivered a funding pool of over £250m for women-powered businesses and aims to increase the representation of women investors. Meanwhile, 134 financial institutions — representing nearly £1tn in investing power — have signed the Investing in Women Code, pledging to improve access to finance, resources and networks.
The Gender Index itself, which tracks over 5.2 million active UK companies, is designed to equip policymakers and investors with the evidence needed to drive accountability and action. Existing tax relief schemes such as the Enterprise Investment Scheme and Seed Enterprise Investment Scheme already offer incentives for early-stage investment, but the data suggests they are not reaching women-led firms at scale. The committee’s proposed Female Enterprise Investment Scheme would sit alongside them, with higher incentives specifically tailored to female founders.
A different model of enterprise
The barriers remain stubborn. Access to finance is still the primary obstacle, compounded by entrenched cultural norms, a lack of diversity among investment decision-makers, and caregiving responsibilities that fall disproportionately on women. Women are also heavily underrepresented in STEM and innovation-based enterprise — only 14 per cent of UK innovation-active firms are women-led. Sectoral data shows that health, wellbeing and social care is the most popular field for female-led businesses, with nearly two in five (39.9 per cent) led by women, followed by arts, entertainment and recreation at 24.2 per cent. London leads in absolute numbers with 292,247 female-led businesses, but regional disparities in access to support and capital remain wide. There is, however, a generational shift: younger founders, particularly Gen Z and Millennials, show a slightly higher representation, with more than 20 per cent of their businesses led by women.
The woman who built a business over 15 years from her kitchen and now employs 50 people; the entrepreneur whose exit may be modest by City standards but transformative by every other measure — these are the businesses that will still be employing people and paying tax in 20 years’ time. They are being undersold as an opportunity for growth. The data has existed for years, scattered across reports and spreadsheets, waiting for those in charge to act. The gap is not a problem. It is an economic opportunity, and backing women should be part of the strategy.
