Recent research commissioned by Three Business reveals that if SMEs are empowered to invest in new technologies, they could deliver a staggering £79 billion UK economy boost within the next 12 months. However, for this potential to be fully realised, businesses need improved connectivity support, and more from the government in the form of capital allowances and investment incentives.
The impact of tech investment
According to the research, the £79 billion increase in productivity could generate over £25 billion per year in additional tax receipts for the UK government. This figure is more than enough to address the £22 billion shortfall currently facing the UK’s public sector finances.
Beyond fiscal gains, technology adoption could help close the productivity gap between the UK and other major global economies.
The UK has long lagged behind countries like the US, France, and Germany in terms of productivity.
For example, the average US worker produces $22.6 more per hour than their UK counterpart, while workers in France and Germany generate $16.4 and $19.2 more per hour, respectively. However, with increased investment in technology, UK SMEs could narrow these productivity gaps by 25% with the US, 34% with France, and 29% with Germany.
What SMEs say about tech and productivity
To unlock their full potential and drive economic growth, SMEs need strong, reliable mobile connectivity solutions, and support from the government in the form of capital incentives.
Learn more about how SMEs can benefit from improved connectivity in our latest 5G for Business report.
The research highlighted several key areas where SMEs need help:
- Business rates relief: Almost half (46%) of SMEs are calling for business rates relief to help reduce operational costs and free up capital for tech investments.
- VAT relief: 43% of respondents said VAT relief would make it easier to invest in new technology.
- Investment incentives: 36% of SMEs want to see more targeted investment incentives, and 29% said higher capital allowances would enable them to adopt advanced digital tools.
- AI and tech development: Over a fifth (21%) of SMEs are calling for more government investment in AI and emerging technologies.
Key areas where SMEs need help:
01
Business rates relief
02
VAT relief
03
Investment incentives
04
AI and tech development
The importance of connectivity for business growth
Reliable and fast connectivity is even more important than factors like skilled labour (83%), office space (69%), and good local transport links (64%). Yet, many businesses in the UK are facing challenges due to poor mobile network quality. Over half (53%) of SMEs said that inadequate mobile coverage is a barrier to their growth.
The research also underscores the critical role that mobile connectivity plays in enabling SMEs to grow and innovate. Nearly all surveyed SMEs (97%) said reliable internet connectivity is essential for running their business effectively, and 94% said high-speed connectivity is just as important.
The UK lags behind Europe in connectivity
The UK’s mobile network infrastructure is falling short compared to other European countries. According to recent reports, the UK ranks 22nd out of 25 European nations in terms of 5G availability and download speeds. London, in particular, came last in a list of 10 European cities. The UK also ranks 26th out of 31 European countries for general network speed.
Without critical improvements to the UK’s mobile infrastructure, businesses will continue to struggle with connectivity issues, further hampering their ability to adopt new technologies and increase productivity.
Full tech ahead
It’s all things go regarding digitisation. During the pandemic, just 33% of medium-sized businesses made investments in technology. Moving to 2024, we found that less than a quarter are using the same digital solutions today that they were two years ago.
Respondents heralded digital investment as a driver for anything from greater agility and responsiveness to opening up new revenue streams. There’s little surprise then that 60% are building on their existing digital solutions and 86% plan to increase their investment in tech.
The top benefits of digital investment so far?
SMEs are at the heart of the UK’s economic recovery, and technology will play a crucial role in driving growth. But for this to happen, businesses need both financial support and reliable connectivity. Mike Tomlinson, Head of Three Business, stressed that technology is a key driver of growth for businesses;
“Through the combination of Vodafone UK and Three UK, we would be able to invest £11 billion into growing the UK’s mobile infrastructure, creating a best-in-class 5G network for business. This would further enable economic growth and innovation across the country.”
Anthony Impey, CEO of Be the Business, added;
“Small and medium-sized businesses are the powerhouse of the UK economy. Using new technologies like AI is essential if these businesses are to become more productive and continue to innovate and grow. This requires easy access to digital tools and high-quality connectivity to support them.”
The path forward for UK SMEs
Tech-enabled SMEs have the potential to significantly boost the UK economy, but need better connectivity and government support to fully capitalise on this opportunity.
As the UK continues to lag behind other European countries in network quality, it’s essential for the government, and network providers like Three Business, to invest in infrastructure and capital incentives.
Empower your SME to reach its full potential with Three Business 5G solutions, designed to unlock productivity and fuel growth.
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