New research from independent funder Bibby Financial Services (BFS) shows that 87% of SMEs plan to invest this year, with two-thirds (66%) expecting sales to rise over the next six months. However, economic uncertainty surrounding the Chancellor’s speech on 26 March is leading many to adopt a wait-and-see approach.
Nearly half (48%) of SMEs are delaying significant investment decisions until after the Spring Statement, while 63% say a lower interest rate environment would give them greater confidence to invest.
Derek Ryan, UK Managing Director at BFS, said businesses are keen to invest but need greater stability.
“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,” he said.
The lingering effects of the Autumn Budget have compounded hesitancy. More than half (52%) of SMEs say they are less likely to invest in the short term, citing rising employer National Insurance contributions as a key factor. The number of businesses with no investment plans has risen to 13%, up from 8% in Q3 2024.
The research also highlights a growing divide between businesses that rely on external finance and those that are self-funded.
While only 6% of SMEs using external funding have no investment plans, this figure more than doubles to 14% for those that are self-financed. Additionally, businesses without access to external finance are more vulnerable to bad debt. Over the past 12 months, SMEs without external funding have written off an average of £45,000 in unpaid debts, compared with £25,000 for those using finance options.
Ryan emphasised the importance of financial accessibility in fostering growth, saying” “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,” he said.
The upcoming Spring Statement represents a crucial opportunity for the government to provide the stability that SMEs need to unlock their investment potential.
“Notably, findings demonstrate the need for stability in stimulating investment among small businesses to drive economic growth,” Ryan added. “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.”
With business confidence closely tied to economic policy decisions, the Chancellor’s ability to deliver a statement that reassures SMEs and encourages investment could be pivotal in shaping the UK’s economic trajectory for the year ahead.
Jamie Young
Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the 'covid era' and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine's coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk
