What's Happening?
Mid-sized businesses in the UK are outperforming larger and smaller companies in terms of productivity growth, according to a study by Grant Thornton. The research, compiled in advance of the autumn budget
2025, shows that mid-market businesses have surpassed the UK average for productivity, measured as average annual revenue per employee, for the past six years. In 2024, productivity at mid-sized businesses was 11% higher than at larger companies and 15% higher than the UK average for businesses with more than 10 employees. Despite challenges such as a skills shortage, mid-market firms are leveraging their size for greater agility and resilience, enabling them to adapt quickly to market changes and access finance more effectively than smaller businesses.
Why It's Important?
The productivity growth of mid-market firms is significant as it highlights their ability to drive economic performance despite facing challenges like skills shortages. These businesses are seen as resilient due to their ability to blend the entrepreneurial mindset of smaller businesses with the resources of larger ones. The study suggests that mid-market firms are well-positioned to capitalize on opportunities presented by technology, particularly AI, which is expected to enhance productivity further. As these firms continue to lead in productivity, they could play a crucial role in driving economic growth and innovation in the UK.
What's Next?
Mid-market firms are expected to continue investing in technology, particularly AI, to bridge the skills gap and enhance productivity. While larger entities have led the way in AI adoption, mid-market firms are increasingly exploring AI to augment employee output rather than replace it. This shift towards augmentative technology could empower teams to achieve more and sustain long-term success. However, challenges such as uncertainty around AI regulation and ethical use remain key barriers to productivity. Addressing these issues will be crucial for mid-market firms to fully leverage AI's potential.
Beyond the Headlines
The emergence of AI as a productivity enabler is seen as a game-changer for mid-market firms, offering a balanced approach to technology and talent. With talent shortages posing a challenge to growth, AI is stepping in as a productivity partner, enhancing what people can achieve. The complexity of larger companies means AI's mistakes are harder to pick up on, while its specific gains become more marginal. In contrast, mid-market firms may benefit more from AI's discernible opportunities, provided transparency and privacy concerns are addressed.
