Family firms across the UK are setting their sights on expansion following another hugely successful year for the sector.

New research by Oxford Economics for the Institute for Family Business (IFB) Research Foundation reveals the vast contribution family firms make to the UK economy – employing over 11.9 million people and making up 87 percent of all private sector firms in the UK.

There are now more than 150,000 family-run firms in the agriculture and extraction sector, making up almost one in 20 of all family businesses in the UK. Family businesses also account for 96 per cent of all private sector firms in the agriculture and extraction sector - one of the highest concentrations out of all sectors in the UK.

Since 2013 family businesses have increased employment by six per cent and turnover has also seen a strong rise, increasing by two per cent to reach £1.3 trillion. In addition, family firms paid £125 billion in taxes and contributed over a quarter (26 per cent ) of the UK’s entire GDP.

Speaking about the new findings, Peter Armitage, Chairman of the IFB, said: “The report sheds light on the sheer size and scale of the family business community. It’s an important reminder of how vital family-run firms are to the UK – serving as the backbone of our economy, with family firms making a phenomenal contribution across all sectors, industries and regions.

“Family businesses have always been at the very heart of the UK economy and based on the steady rise in their recruitment and turnover, it is clear they are here to stay. It’s encouraging to see family firms with such a buoyant attitude towards their future expansion - almost half of family SMEs expect to grow over the next two to three years.”

Growth and expansion is a top priority for many SME family firms with just under half (49 per cent ) stating they aim to grow over the next twelve months.

Looking to how they will turn this ambition into reality just under a half of firms (43 per cent ) say they will invest in improving the skills of their workforce to support growth, with a third (33 per cent ) planning to boost productivity through investing in new machinery and premises.

Looking beyond their traditional activities to diversify their business and customer base, 42 per cent of family firms are planning to move into new markets and 37 per cent are developing and launching new products and services.