Businesses of Small to Medium Size Show Tenacity in Difficult Economic Conditions
UK Small and Medium-Sized Enterprises (SMEs) Focus on Employee Wellbeing, Cost of Living, and Carbon Footprint Reduction in 2025
In the current business landscape, UK SMEs are prioritising the wellbeing of their employees, cost of living support, and carbon footprint reduction initiatives. While there are some nuances and challenges, these trends are shaping the future of SMEs in the UK.
Employee Wellbeing
Flexible working models and work-life balance are becoming increasingly popular among SMEs as a means to improve employee satisfaction and support mental health. Companies are adopting remote work, hybrid schedules, and adaptable hours to maintain productivity while respecting employees' autonomy.
However, mental health support remains underutilized in UK SMEs, with only about 15% of employers offering mental health days beyond regular leave. There is still a significant stigma associated with mental health, which creates barriers to more open support and culture change within SMEs.
SMEs are also recognising the importance of benefits like employee assistance programs and private health insurance that include virtual GP access. These benefits help address both physical and mental wellbeing. Some SMEs are even offering mindfulness subscriptions, learning opportunities, and financial benefits supporting wellbeing.
Cost of Living Support
Some companies offer practical financial support to employees, such as interest-free loans for housing deposits and discounts on essentials. However, explicit widespread strategies for cost-of-living support in SMEs specifically were not detailed in the sources, indicating this may be less formalized or vary widely among SMEs.
Carbon Footprint Reduction Initiatives
While data on SMEs’ carbon footprint reduction initiatives in 2025 was not evident, the overall cautious optimism among SMEs highlights a priority to manage controllable factors like costs and technology investments, which often include sustainability tech in contemporary business strategies. Given broader UK policy trends, SMEs are likely increasingly considering environmental impacts, but specific initiatives and adoption rates were not documented.
Purbeck Insurance Services' Survey and Event
A survey from Purbeck Insurance Services suggests that close to a third (29%) of UK SMEs have carried on business as usual with no Government support during the pandemic. The survey also paints a more positive picture of how UK SMEs are coping with the pandemic.
Purbeck Insurance Services is the only provider of personal guarantee insurance to small business owners in the UK. They are hosting a free networking event, PGI Business Link, for professionals involved in SME lending on 4th June, in O'Neill's in Broad Street, Birmingham. The event allows attendees to share best practice and discuss the growing demand for finance from SMEs.
SMEs in the West Midlands are taking the most action on decarbonisation. It is advisable to secure personal guarantee insurance when securing a new personal guarantee backed loan to protect business owners' and directors' personal finances in the event of business failure.
64% of SMEs are committed to reducing their carbon footprint, with the most common actions including reducing waste and setting up recycling programs. It is worth noting that SMEs run by younger people (aged 25-34) are most likely to reduce their carbon footprint.
51% of UK SMEs have assisted their staff during the cost of living crisis. It is important for SMEs to support their employees during these challenging times to maintain staff retention, which remains healthy across SMEs, with the smallest businesses (1-9 employees) seeing the best results.
In Q2 2025, 24% fewer small and medium-sized businesses needed personal guarantee backed finance for business loans, according to Purbeck Insurance Services. This suggests that SMEs are improving their ability to scale rather than just survive.
In conclusion, UK SMEs in 2025 are prioritizing flexible working and mental health support, but face ongoing stigma and limited mental health-specific leave. Cost of living support includes loans and discounts but is not yet widespread as formal policy. While carbon footprint reduction is likely a consideration, clear trends or initiatives within SMEs are not explicitly reported in the most recent data.
In the coming year, SMEs are likely to focus on offering flexible working models and mental health support, such as employee assistance programs and mindfulness subscriptions, to improve employee wellbeing. (events, wellbeing)
Simultaneously, many SMEs are proactively considering reducing their carbon footprint by implementing actions like waste reduction and recycling programs, demonstrating a growing interest in environmental sustainability within the industry. (industry, finance, business, events)
