Businesses hungry to invest but cautious ahead of Spring Statement

March 19, 2025

As the Spring Statement approaches, the UK’s small and medium sized businesses are eager for economic clarity before committing to major investment decisions.

SMEs have strong ambitions for growth, with 87 percent planning to invest this year, according to new research from independent funder Bibby Financial Services (BFS). Data from BFS’s Q1 2025 SME Confidence Tracker, which surveyed 1,000 UK SMEs, reveals growing optimism among businesses with two-thirds (66%) expecting sales to rise over the next six months.

However, uncertainty around the Spring Statement on 26^th March 2025 is causing short-term hesitation. Almost half (48%) of SMEs are delaying major investment decisions until after the Chancellor’s speech, and 63 percent say a lower interest rate environment would make them more confident to invest.

Derek Ryan, UK Managing Director at Bibby Financial Services, comments: “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 impact of previous policy changes is still being felt by businesses. The Autumn Budget in October dampened investment intentions, with more than half (52%) of SMEs saying they are less likely to invest in their business in the short-term, citing rising employer National Insurance contributions as a key factor. The number of businesses with no investment plans at all has increased to 13 percent, up from eight percent in Q3 2024.

According to the data, the propensity to invest is greater among those using external sources of finance. While six percent of those using external finance have no plans to invest, this more than doubles to 14 percent for businesses that are self-funded. Additionally, businesses without the safety net of external finance suffer greater levels of bad debt due to non-payment.

Of those that have written-off debt in the last 12 months, businesses without external sources of finance suffered to the tune of £45,000, compared with £25,000 for businesses using external finance.

Derek Ryan adds: “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.”