Digital Connectivity and the SME Economy: A 1% Productivity Gain That Could Unlock Billions
- Iqbal Bedi
- Jul 7
- 3 min read
Updated: Jul 8
Local authorities and enterprise agencies are on the front lines of driving regional growth—and SMEs are at the heart of that challenge.
With the UK economy still under pressure, operational costs rising, and private investment cooling, stimulating SME productivity is not just a national imperative—it’s a local one.
Whether you’re tasked with implementing economic strategies, supporting innovation zones, or delivering grant-backed business support, the core question is the same: How do we help our local SMEs compete and grow sustainably in today’s climate?
The answer—consistently reinforced in recent government strategy documents—is digital.
From cloud-based systems to AI-powered forecasting, fibre and 5G connectivity to real-time sensor data, digital infrastructure and digital capability are the golden thread running through SME competitiveness. And the potential impact of even modest improvements is huge.
The Timing is Ideal to Act
Amid signs of renewed optimism—UK borrowing costs falling, interest rate cuts expected this summer, and the services sector expanding at its fastest rate in ten months—the timing is ideal to act.
The UK’s 5.5 million SMEs account for 99.8% of all businesses, employ over 16 million people, and contribute up to GBP 2.8 trillion in turnover. Yet many remain vulnerable—still grappling with inflation, labour shortages, and outdated technology systems that stifle growth.
This is where local authorities and enterprise partnerships can lead.
Even a 1% Productivity Gain Could Be Transformational
And Real Gains Are Often Far Greater.
According to Be the Business, a 1% productivity improvement across SMEs could unlock GBP 94 billion over five years—nearly GBP 20 billion per year.
That’s not just a headline—it’s a strategic lever for inclusive, place-based economic renewal.
But let’s be clear: 1% is a conservative benchmark.
In our real-world experience, productivity improvements through digital adoption often exceed this baseline dramatically:
Revenue growth: A food manufacturer we supported projected a 9% increase in sales by automating stock management and order fulfilment.
Cost savings: Predictive maintenance on blast freezers, ovens, or packaging machines has cut unplanned downtime by up to 30%, protecting output and avoiding emergency repairs.
Labour efficiency: Retailers using AI to forecast footfall and customer traffic have reduced wage costs by up to 15% through smarter rota planning.
Workforce resilience: Automation and robotics reduce fatigue and injury in repetitive roles—vital in sectors with staffing shortages, especially in rural areas.
Product quality: IoT sensors in food production environments have improved batch consistency and reduced rework, boosting both margins and compliance.
These results are not sector-specific. They apply across food and drink, manufacturing, retail, hospitality, transport, logistics, and professional services.
And when scaled locally—even to a small percentage of your SME base—they represent millions in additional turnover, safer jobs, higher wages, and more resilient supply chains.
Local Authorities Can Lead
Despite the economic and social value of digitisation, many SMEs fall through the cracks. Startup programmes don’t serve them. Toolkits aren’t tailored. Private consultancy is unaffordable.
That’s why we’ve developed a model that works for local government.
Our Enterprise Advisory practice helps local authorities and enterprise agencies deliver high-impact digital transformation support for SMEs. We work in partnership with public-sector teams to design and implement locally relevant, economically aligned, digitally focused interventions. We offer full end-to-end support from undertaking digital maturity assessments, providing tailored technology adoption roadmaps with additional support to source grant funds and to procure and implement technology solutions.
Whether you’re running a regional growth programme, administering UKSPF or AI Growth Zones, or simply want to support your business base more effectively, our approach provides clarity, capacity, and results.
Aligning With National Priorities
The UK Government has placed digital transformation, AI, and connectivity at the centre of its industrial strategy. From DSIT's digital infrastructure funding to devolved Growth Zone initiatives, there's never been stronger alignment between local action and national direction.
By helping SMEs adopt the digital tools they need to succeed, local authorities can:
Improve productivity and competitiveness
Strengthen high-value supply chains
Reduce business failure rates
Create better jobs and economic resilience
Let’s Unlock the Digital Dividend
Your local SME base is a sleeping giant. Digital transformation is the key to awakening it—and local authorities and enterprise agencies hold the tools to unlock that growth.
We’re here to help you make that happen.
👉 Contact our Enterprise advisory team at info@intelligensconsulting.com or download our brochure to find out more about how we can empower business growth through digital technology.
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