UK small and medium enterprises (SMEs) are eager to invest but are exercising caution as the Spring Statement approaches, according to independent funder Bibby Financial Services (BFS).
Research by BFS revealed that 87% of SMEs plan to invest in 2025, though many are postponing major decisions until after the statement on 26th March provides clearer economic guidance.
Go deeper with GlobalData
The findings come from BFS’s Q1 2025 SME Confidence Tracker, which surveyed 1,000 UK SMEs.
The data shows a growing optimism among businesses, with 66% expecting sales to increase in the next six months.
However, the upcoming Spring Statement of the UK Government on 26 March 2025 has many businesses on edge, with nearly half (48%) delaying major investment decisions until after the Chancellor’s announcement.
Nearly 63% of SMEs believe that a lower interest rate environment would bolster their confidence to invest.
The shadow of the Autumn Budget still lingers, with more than half (52%) of SMEs feeling less inclined to invest in the short term, particularly due to the hike in employer National Insurance contributions.
As a result, the number of businesses with no investment plans has increased to 13% from 8% in Q3 2024.
BFS UK managing director Derek Ryan said: “UK businesses are showing a clear appetite to invest, but many are taking a wait-and-see approach ahead of the Spring Statement.
“Following the National Insurance contributions announced in October, business leaders are craving stability before they deliver investment plans. Without this, the government’s plan to kick-start economic growth is at risk.”
The BFS data further highlights the link between investment intentions and the use of external finance.
Among those utilising external finance, only 6% have no investment plans, compared to 14% for self-funded businesses.
Additionally, SMEs without external finance face higher levels of bad debt, with non-payment losses averaging £45,000 ($58,380), in contrast to £25,000 for those with external financial support, according to the data.
Ryan added: “Our SME Confidence Tracker highlights a clear split in the fortune and outlook of businesses using external sources of finance, compared with those who are self-funded, illustrating the importance of the Chancellor’s plans for reform to make it easier for businesses to trade and raise finance.
“Notably, findings demonstrate the need for stability in stimulating investment among small businesses to drive economic growth. The Chancellor has a golden opportunity to get the ball rolling in her Spring Statement later this month.
“After a challenging first Autumn Budget, sights are firmly set on how further changes may impact ambitious businesses across the country.”
