UK business leaders rate productivity and output as their biggest pressure this quarter, a new survey shows.
As part of Employment Hero’s Quarterly SME Pulse (powered by GWI), 600 senior business leaders across the UK were surveyed between April and June 2026 and asked to rate the pressure their organisation faces across six areas.
Nationally, productivity and output came out on top, at 36%, ahead of wages and remuneration at 34%, workload and burnout at 31%, hiring and talent acquisition at 31%, and regulatory compliance at 31%. Employee retention came in lowest of the six, at 29%.
But that’s not the case for the UK’s smallest businesses, where a different source of strain took the top spot.
The National Picture and the Micro Business Exception
Core businesses (21 to 150 staff) and mid-market businesses (over 150 staff) both rank productivity as their top pressure at 36% and 41% respectively. However, Micro businesses, those with fewer than 21 staff, rank wages and remuneration as a leading pressure at 31%, ahead of productivity at 28%. Every other pressure measured (workload, hiring, compliance and retention) sits below both of those for micro businesses, at 22 to 24%.
So while core and mid-market businesses are shifting toward output as their main worry, micro businesses are the one segment still naming the cost of paying staff as their most critical concern.
Cost still matters at larger businesses, however. Wages and remuneration is the second-highest pressure at 34%, just behind productivity. And a similar pattern shows up outside the Pulse survey. The British Chambers of Commerce’s Quarterly Economic Survey for Q1 2026, based on 4,560 respondents, 91% of them SMEs, found labour costs were the single biggest cost pressure businesses reported, cited by 73%.
Why Productivity Is A Concern
A national shift toward concerns around productivity is evident too. According to the Office for National Statistics’ (ONS) latest productivity flash estimate, UK output per hour worked was just 3.5% above its pre-pandemic (2019 average) level in the first quarter of 2026, a cumulative gain of roughly half a percent a year over that seven-year period.
ONS’s bulletin describes that growth as “weak compared with productivity trends before the 2008 global financial crisis,” when the UK saw closer to 2% a year. Against that backdrop, a business leader naming productivity as their biggest pressure makes sense considering how long this issue has persisted.
Retention Ranks Lowest Everywhere
Employee retention is the lowest-rated paint-point in every single size band, which is notable given the struggles some employers have faced to attract and keep staff, particularly in sectors pushing up wages to compete for skilled workers.
The gap between retention and the top-ranked pressure in each segment isn’t necessarily related to business size, however. At mid-market businesses, the gap between productivity (41%) and retention (36%) is 5 points. At micro businesses, the gap between wages (31%) and retention (24%) is 7 points. At core businesses, the gap between productivity (36%) and retention (24%) is 12 points, the widest of the three. In other words, retention isn’t just the lowest-ranked pressure everywhere, in some segments it’s a distant last, and that distance doesn’t move in a straight line with business size.
What This Means for UK SME Leaders
The biggest worries facing leaders this quarter is what their businesses can produce and how quickly, and, for the smallest businesses, how to keep down costs.
As Chancellor John Healey said this week August in response to persistent geopolitical economic issues, “many British businesses have been put under pressure by increasing costs” with increases to inflation threatening “growth and push[ing] up costs for businesses and governments alike.”
Both issues are about to get a hearing at Westminster. Parliament returns from summer recess on 1 September, and the Chancellor has named growth as one of his stated priorities ahead of the Budget on 28 October, when decisions on tax, wages and business costs could shift the pressures leaders are naming in this survey even more significantly.
