COUNCIL cash spent with small businesses is more than half as likely again to be pumped back into the North East economy than money spent with larger ones, says a new report.
Research from the Federation of Small Businesses shows 58 per cent more of the money spent by councils with small firms is reinvested in the local economy.
The FSB and the Centre for Local Economic Strategies surveyed local authorities across the UK and found they spent £8.7billion buying goods and services in their local area in the last year.
For every £1 of that, 63p was spent locally by small firms, compared to 40p in every £1 spent with a larger business.
FSB North East regional chairman Ted Salmon said councils should make it easier for small firms to win business.
“This report shows the power and strength of small firms to create jobs and growth in the local economy if they are given the help to do so.
“While our members do win contracts, many are still deterred by the process.
“A one-size-fits-all approach won’t work, and something that works for one council won’t necessarily work in another.
“This is why we’re calling on local authorities to work with us to create an environment in which small firms can grow and prosper.”
The FSB said if each council had spent an extra five per cent of its budget locally and committed three per cent more to small firms, £788million could have been generated for local economies.