A ‘forgotten army’ of medium-sized firms could be the saviour of Yorkshire’s economy and spearhead export success and job creation, according to employers’ group, the CBI.

The body has produced a new report calling on bosses from firms of between £10 million and £100 million turnover to be at the heart of Government economic policy-making with places on Prime Minister David Cameron’s Business Advisory Council and for policy initiatives to cater for mid-sized firms.

It said medium-sized businesses had been too long overlooked by Government, but had the potential to inject between £20 billion and £50 billion into the economy by 2020 – including boosting the Yorkshire economy by £3.6 billion.

Although mid-size firms represented less than one per cent of UK businesses, they generated 22 per cent of economic revenue and 16 per cent of all jobs.

Andrew Palmer, CBI Yorkshire regional director, said: “Medium-sized businesses are truly the UK’s forgotten army and now is the time to unlock their true potential.

“We should be championing, nurturing and encouraging our mid-sized firms so that more of them grow and create jobs. For too long these companies, which could inject tens of billions of pounds into our economy, have fallen under the radar of policymakers.”

In Yorkshire, where unemployment reached 9.7 per cent in three months to August, medium-sized businesses accounted for about 16.7 per cent of all jobs and represented 30 per cent of the UK manufacturing base.

The CBI wants the UK to have its own version of the German “Mittelstand” – a backbone of medium-sized firms which export, innovate and generate growth.

It has also urged the Government to make bond markets more accessible to mid-sized firms and wants ministers to work with the financial services industry to enable more firms to issue bonds and use new products based on the bonds to attract new investors.

The CBI said the Government could then kick-start demand through credit easing, using public money to back the new bonds as well as encouraging greater use of venture capital and making it easier for large companies to invest in medium sized firms, possibly in their supply chains.

Entrepreneurs’ Relief should be restructured to incentivise longer-term investments, with the threshold for qualifying for the relief brought to below the current five per cent . The scope of the research and development tax credit should also be widened to include all aspects of design.

The report said the contribution mid-sized firms make to the UK economy was much smaller than in France and Germany, where they contribute a greater share of total revenue and generate a significantly higher proportion of jobs.