Big bets, small firms: will the UK’s new Industrial Strategy leave everyday entrepreneurs behind?
The UK now has a Modern Industrial Strategy again: a ten year plan to make it quicker and easier to invest in eight priority sectors and the infrastructure that supports them. Ministers promise more stable rules, faster planning decisions and a clearer pipeline of public investment, billed as a reset after years of stop start policy.
At the same time, Europe is worrying out loud about something much less glamorous. The EU’s 2025 SME Assembly in Copenhagen put “everyday entrepreneurs” at the centre of the debate, with policymakers warned about “overstretching” small firms through overlapping sustainability and financial rules. The Commission’s Omnibus I simplification package aims to cut reporting burdens for companies by a quarter and for SMEs by roughly a third, mainly by delaying and trimming obligations under CSRD and CSDDD.
Put those two stories together and a tension appears. Industrial policy is built around big bets on clean energy, advanced manufacturing and digital infrastructure. Yet 99.9 per cent of UK businesses are SMEs, and most are micro firms, from hairdressers and joiners to hauliers and café owners. The risk is that strategy and reality drift apart: support and subsidies flow to original equipment manufacturers and major investors, while the smallest players wrestle with complex paperwork and rising costs.
What the UK’s new Industrial Strategy is trying to do
The Modern Industrial Strategy published in 2025 is framed as a decade long partnership between government and business. It sets out a 10 year plan to increase private investment in eight growth driving sectors, including clean energy, advanced manufacturing, life sciences and digital industries. The aim is to give investors stability and speed: a clearer projects pipeline, simpler regulation and faster decisions for schemes that fit the strategy.
Under the plan, ministers highlight headline numbers. A 725 billion pound infrastructure programme over ten years is supposed to fix decaying public assets and unlock private capital. Energy intensive manufacturers are promised lower grid charges and streamlined planning if they commit to low carbon technologies. Sector plans lay out roadmaps for everything from grid reform to data centres, with an emphasis on large scale investment and long lived assets.
There is a logic to that focus. Big infrastructure and anchor investors can shift productivity and emissions trajectories in a way that thousands of tiny interventions cannot. The danger is that the ecosystem around those anchors is treated as an afterthought. Suppliers, contractors and local service businesses are expected to adapt, but not always given clear routes to plug into the opportunity or the support schemes.
In brief
The UK’s Modern Industrial Strategy is designed around eight priority sectors and large scale investment, but its success will depend on how well it connects those “big bets” to the small firms that make up almost the entire business population.
Everyday entrepreneurs by the numbers
The term “everyday entrepreneurs” can sound like a slogan, but the numbers behind it are hard to ignore. In the UK, there were around 5.7 million SMEs in 2025, making up 99.9 per cent of all businesses. They employ roughly 16 to 17 million people, close to 60 per cent of private sector employment, and generate about half of private sector turnover.
Across the EU, the picture is similar. Micro and small enterprises account for about 99 per cent of all firms and employ the majority of the private sector workforce. The European Commission’s recent “everyday entrepreneurs” paper describes them as the “heartbeat” of competitiveness: close to customers, resilient in crises and often the first to feel the impact of new rules or market shifts.
At the SME Assembly in Copenhagen, that heartbeat came with a warning. Speakers from trade bodies and small business associations argued that overlapping sustainability reporting, due diligence and financial regulations risked “overstretching” small firms. They welcomed the Omnibus I package’s promise of around 6 billion euros in administrative relief, but stressed that even simplified frameworks like CSRD and CSDDD can become barriers when pushed down supply chains.
In brief
Everyday entrepreneurs are not a niche group. In both the UK and EU, SMEs are almost all businesses and provide most private sector jobs, yet many feel squeezed by overlapping rules that were not designed with their capacity in mind.
When big policy collides with micro firm reality
The collision between industrial strategy and micro firm reality often happens at the level of paperwork, not politics. Take the sustainability agenda. The Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive are aimed at larger companies, but their requirements cascade down supply chains. A small haulier or packaging company may not be directly in scope, yet still finds itself fielding detailed questionnaires and audit clauses from bigger clients that are.
At the same time, domestic rules on late payment, tax, employment and safety have all become more intricate. For an engineering micro firm supplying a component to a green tech OEM, the practical experience of industrial strategy is not sector deals or innovation hubs. It is another compliance spreadsheet, another portal login, another clause in a contract that takes time away from sales or product development. Surveys regularly report that regulation and administrative complexity sit alongside access to finance as a top barrier to small business growth.
Communication magnifies the problem. Government publishes strategy papers, sector plans and grant guidance in PDFs and slide decks that can run to dozens of pages. Small firms juggling day to day operations rarely have the bandwidth to decode these documents. Better visual communication would help: simple maps showing which schemes apply to which firm types, short flow charts of eligibility. In many departments, officials are already experimenting with more accessible infographics, and in practice even a basic free photo editor can help teams clean up diagrams or annotate screenshots so that key messages land more clearly for time poor owners.
In brief
Overlapping rules and complex communication turn policy into a time sink for small firms, so even well intentioned strategies risk becoming barriers if they are not designed and explained with micro businesses in mind.
Who really plugs into sector deals and public priorities?
Supporters of industrial policy often point to supply chains as the way SMEs benefit. In theory, when government strikes a sector deal for batteries or offshore wind, the order book for casting firms, software suppliers, recruiters and local services grows. In practice, the firms that plug in most easily are those already scaled enough to handle procurement processes, compliance requirements and long payment cycles.
A local hairdresser, café owner or van based electrician in a town that hosts a new gigafactory may see more customers and higher footfall, but they rarely appear in strategy documents. Hauliers and subcontractors are more directly linked, yet often face asymmetrical risk: they invest in kit or staff to serve a large client, only to find that a change in subsidy or a delay in planning pushes work back by a year. From their point of view, macro strategy can feel like a distant conversation that occasionally rearranges their order book without warning.
There is also a question of who has the resources to track and respond to opportunities. Large OEMs and mid sized firms have policy teams or trade associations scanning consultations and funding calls. Micro businesses rely on local accountants, growth hubs or chambers of commerce. Those intermediaries often repackage government information into newsletters or short guides. Some have started to rebuild dense strategy slides into simple one page visuals for their members, and using a free photo editor to crop, highlight and translate key charts from official decks has become a low cost way to make central material usable on phones and social feeds.
In brief
Sector deals and big projects do filter work down to smaller firms, but the ones that benefit most are those with enough capacity to engage. Others catch indirect demand while shouldering compliance and timing risks that are rarely acknowledged in the glossy brochures.
How to stop rules becoming a barrier to entry
One lesson from Europe’s Omnibus I debate is that good intentions can still produce barriers if cumulative burdens are ignored. The Omnibus package responds to widespread concern that layered sustainability and financial rules had become “overly complex and costly” for businesses, especially SMEs, and seeks to reduce reporting obligations by up to 35 per cent for smaller firms.
For the UK, the equivalent challenge is to ensure that industrial strategy does not quietly tilt the playing field further towards firms with in house compliance and legal teams. A practical starting point would be an explicit “SME test” for every major strategic policy. That test would ask: how many micro and small firms will be touched by this change; how many forms, logins or attestations will it trigger; and what can be removed or simplified without undermining the underlying goal.
Communication should be part of that test. If the only way to understand a funding scheme is to read a 60 page PDF, it is effectively closed to many everyday entrepreneurs. Government and sector bodies could standardise a small library of visual templates for policy explainers, which local hubs and accountants could adapt for their communities. Here again, lightweight tools matter: a free photo editor can be enough to add plain language captions, call out dates and strip away clutter so that a busy builder or salon owner can see, in 30 seconds on a phone, whether a scheme is worth their time.
In brief
The UK will not match its industrial ambitions without a parallel effort to simplify rules and explanations for micro firms, using an explicit SME test and much clearer visual communication.
Towards an SME test for every strategic policy
An effective SME test would have several elements. First, numerical thresholds should be set with real world distributions in mind, not just neat round numbers. If 95 per cent of firms are micro businesses, then exemptions and simplified regimes should be the norm, not the exception. Second, impact assessments should model cumulative effects, showing how a typical haulier, hairdresser or small manufacturer experiences the combined weight of tax, reporting and compliance changes.
Third, there should be routine feedback loops. The OECD’s regulatory outlook stresses that rules improve when those affected are involved in shaping them. Regular SME panels, drawn from a mix of sectors and regions, could review draft guidance and communication materials before they go live. Finally, there needs to be a willingness to prune. If a requirement is shown to add little value relative to its burden on small firms, it should be redesigned or removed.
In brief
A serious SME test would treat simplicity as a design goal, involve everyday entrepreneurs in drafting, and accept that sometimes the best pro growth move is to strip rules out rather than layering new ones on top.
Conclusion
Industrial strategy and everyday entrepreneurship do not have to be in tension. The UK needs long term plans for energy, infrastructure and advanced industries if it is to stay competitive and hit climate targets. It also needs millions of small firms to keep taking risks, hiring locally and providing the services that underpin daily life. The danger is that big ticket strategies focus on flagship sectors and projects, while the regulatory and reporting architecture makes life steadily harder for those hairdressers, hauliers and high street shops.
The EU’s “everyday entrepreneurs” debate is a reminder that simplification is not a luxury. When rules become too dense and cumulative burdens too high, the smallest players step back from opportunities or never start in the first place. A UK industrial policy that takes SMEs seriously would build an explicit SME test into every strategic move, invest as much care in communication as in consultation, and measure success not only in gigawatts and gigafactories, but in the confidence of the local firms that keep the economy’s heartbeat going.
FAQ
What is the UK’s Modern Industrial Strategy?
It is a ten year plan published in 2025 that aims to increase business investment in eight priority sectors, supported by a 725 billion pound infrastructure programme and simpler, faster regulation to give investors more certainty.
Who are “everyday entrepreneurs”?
The term refers to the millions of micro and small businesses that make up almost all firms in the UK and EU, such as hairdressers, builders, cafés and small hauliers, which together provide most private sector jobs and about half of turnover.
What is the EU’s Omnibus I package?
Omnibus I is a simplification package from the European Commission that delays and streamlines parts of major sustainability and financial rules, including CSRD and CSDDD, with the aim of cutting reporting burdens by around 25 per cent overall and 35 per cent for SMEs.
How do big regulations affect small firms if they are not directly in scope?
Even when laws formally target large companies, their requirements flow down supply chains. Small suppliers may have to provide data, accept new contract clauses or adapt processes to help big clients comply, which adds time and cost without always bringing direct benefits.
What is an SME test for policy?
An SME test is a structured way to check how new rules and strategies affect small firms. It looks at how many SMEs are touched, what administrative steps are required, whether communication is accessible, and whether cumulative burdens risk deterring everyday entrepreneurs from investing or growing.