Digital Transformation and Productivity Growth in UK SMEs Post-Brexit

Abstract

This paper examined the relationship between digital transformation and productivity growth in UK small and medium-sized enterprises (SMEs) in the post-Brexit environment. Using a mixed-methods approach combining quantitative data from 450 SMEs and qualitative interviews with 30 business leaders, this study investigates how digital adoption influenced productivity metrics between 2020 and 2024. Findings revealed that SMEs with comprehensive digital strategies experienced 23% higher productivity growth compared to digitally lagging counterparts. However, significant barriers persist, such as skills gaps, capital constraints, and regulatory uncertainty. The study contributes to understanding how Brexit-related trade disruptions have accelerated digital adoption as a compensatory strategy. Recommendations include targeted policy interventions, enhanced digital infrastructure investment, and sector-specific support programmes to maximise productivity gains from digital transformation.