SME investment could boost UK economy by $80 bn: Barclays

In 2024, UK business investment reached a record level, and in the first half of 2025, business investment grew 3 per cent year-on-year. At present though, larger companies are driving investment in the UK, while SMEs lag behind in both confidence and capital spending. Yet, SMEs represent 52 per cent of national turnover and 60 per cent of employment, meaning that even incremental increases in average investment rates by SMEs could have a sizable economic impact for the UK overall.

According to Barclays Business Prosperity Index data for Q2 2025, 53 per cent of SMEs intend to increase investment in the next 12 months, compared to 67 per cent of large companies over the same period. The expected amounts of investment also differ significantly, with SMEs on average planning to increase investment by 4.8 per cent, and large companies by 10.2 per cent.

Barclays has identified three key drivers of SME investment in the UK: foundational factors such as overall confidence in the economy; necessary investments to stay competitive amid rising costs; and ‘big bet’ investments for expansion. However, many SMEs are cautious due to economic uncertainty, prioritising immediate challenges over growth, and can be reluctant to borrow.

“Boosting investment is core to driving growth in the UK. The government’s recent Industrial Strategy and Plan to support SMEs, along with data showing that larger businesses are increasing investment, are positive steps in the right direction. Yet, Barclays analysis indicates there is a substantial opportunity to boost SME investment further. SMEs are the backbone of the UK economy, representing 60 per cent of employment and over half of private sector turnover. Even small improvements in SMEs’ appetite to invest could have transformational impacts for the UK economy,” Matthew Hammerstein, CEO of Barclays UK Corporate Bank and head of the Bank’s public policy and corporate responsibility function, said.

"This report highlights the untapped potential for growth within the SME sector. While SMEs often face higher perceived risks due to their size and resource constraints, they also offer outsized rewards in terms of innovation, agility, and regional economic impact. Striking the right balance on risk-reward is key to driving sustainable growth across the UK. At Barclays UK, we are committed to supporting SMEs in their investment journey, ensuring they have the resources and confidence to thrive in today's competitive market,” Abdul Qureshi, managing director of Barclays Business Banking, said.

The report draws on Barclays' extensive data and insights, as well as national investment data from the Office for National Statistics (ONS) and the Organisation for Economic Co-operation and Development (OECD).

ALCHEMPro News Desk (RR)