UK mid-sized businesses surpass 2025 growth targets: BDO

Access to external finance (42 per cent) and rising customer demand (40 per cent) were key drivers of outperformance, supported by productivity gains from technology and AI (39 per cent), successful product or service launches (39 per cent) and better-than-expected recruitment and retention (39 per cent).

This positive trading picture is translating into continued capital commitment. Two-thirds (66 per cent) are holding investment steady and 29 per cent are stepping it up, with only 5 per cent delaying and fewer than 1 per cent pausing or withdrawing investment, suggesting firms backing their own pipelines and balance sheets, even as wider economic sentiment remains subdued.

Despite their strong performance, businesses’ confidence in the UK as a place to grow remains limited. Just 35 per cent of mid-sized companies surveyed describe the UK as a ‘strong environment’ for long-term business growth, while 65 per cent say conditions have become more challenging. One in five (20 per cent) are already shifting operations or investment overseas.

That caution reflects persistent structural pressures. On workforce issues, over a third (36 per cent) cite plugging skills gaps as their biggest challenge. Rising wage expectations are another major pressure (24 per cent), likely reflecting the ongoing effects of inflation and higher National Insurance contributions.

Operationally, managing supply chain disruption is the most pressing barrier to growth (32 per cent). At the same time, while AI is seen as a driver of productivity, one in four firms (23 per cent) cite adopting new technologies as a challenge, highlighting the uneven pace of digital transformation across the mid-market.

To fuel their growth, mid-sized businesses are forming new strategic partnerships (45 per cent), looking to secure new investment or finance (42 per cent) and investing in automation, technology or AI (42 per cent).

A further 37 per cent are expanding their physical footprint or operations and the same proportion are entering new markets. These data points showed a mid-market willing to commit capital to capacity and innovation, but pragmatic about directing growth wherever conditions are most favourable, in the UK or overseas.

“These findings highlight the strength of the UK’s mid-market: businesses are delivering growth and continuing to invest despite challenging conditions. But they also carry a warning: confidence in the UK as a place to scale is not assured,” said Richard Austin, partner at BDO. “With mid-sized businesses forecast to contribute £745 billion to UK GVA and create an extra 1.9 million jobs by 2028, the government will want to use the Autumn Budget to reassure this section of the market and address persistent barriers around skills, costs and competitiveness. Only with the mid-market firmly and confidently anchored in the UK, will we see the growth the economy needs.”

The survey was conducted among more than 500 leaders of mid-sized businesses in UK.

ALCHEMPro News Desk (SG)