Mid-market productivity leads for seventh year, Grant Thornton finds

Mid-size businesses have remained the UK’s most productive firms for the seventh consecutive year, according to new analysis from Grant Thornton. 

The study, published ahead of the Autumn Budget (26 November), found that labour productivity in the mid-market – measured as average annual revenue per employee – has continued to surpass that of larger and smaller companies, as well as the national average.

Grant Thornton’s research, which examined 11 years of data, showed that in 2024 mid-size businesses generated 11% more revenue per employee than large firms and 15% more than the UK average for companies with 10 or more staff. The gap has widened each year since 2018, when the segment first pulled ahead.

However, overall productivity across UK businesses remains weak by international standards. Office for National Statistics (ONS) data showed that productivity in the second quarter of 2025 was 0.8% lower than in the same period a year earlier.

Grant Thornton’s latest Business Outlook Tracker – a regular survey of 600 mid-market decision makers – found that optimism remains strong around growth, funding and the broader economic outlook. But profit expectations fell sharply, down 21% since June, marking the lowest level since December 2021.

Despite these pressures, 78% of respondents said they believed the government’s Industrial Strategy would help improve national productivity, suggesting continuing confidence in policy direction.

Skills shortages were identified as the most significant barrier to higher productivity. Nearly four in five (79%) businesses said a lack of necessary skills was holding them back, particularly in leadership, remote team management and communication – although most firms already provide internal training in these areas.

Artificial intelligence was viewed as a potential solution, with 78% of businesses expecting AI to boost productivity within the next 12 months. A large majority (81%) said they were exploring ways to use AI to enhance, rather than replace, employee output.

Nevertheless, 24% cited uncertainty over regulation and ethical use as a concern, underlining the need for clear governance as adoption increases.

Carolyn Hicks, transformation and people advisory partner at Grant Thornton, said: “Mid-market businesses continue to set the pace for UK productivity, but the challenge of skills shortages is ever-present. Targeted upskilling and a focus on leadership and communication are critical to unlocking growth.

“Essentially, it’s down to their size – they can adapt quickly to market changes, unlike large enterprises, and often have better access to finance than smaller firms. That blend of agility and resources underpins their resilience.”

She added: “The emergence of AI as a productivity enabler is a game-changer. When deployed responsibly, it augments human capability and empowers teams to achieve more. The mid-market is well placed to capitalise on the opportunities that AI brings.”