Almost half of UK SMEs are optimistic about the year ahead, but cost pressures remain the biggest barrier to growth, according to new research from Simply Asset Finance, published ahead of the autumn budget.
The study shows that SME confidence is increasing: 49% of decision makers are positive about the next 12 months, up from 43% a year ago. Notably, 19% say they are “really excited” about their growth prospects – more than double the 8% in 2024.
But despite the growing optimism, the challenges facing SMEs remain largely unchanged compared to last year’s Budget. Businesses continue to struggle with high energy prices, inflationary pressures and rising taxes, leading to renewed calls for government action to boost productivity.
High energy costs are still the biggest problem for medium-sized businesses. 40% of those surveyed are demanding targeted support from the Chancellor – and among medium-sized companies the figure is even 54%. The UK remains one of the most expensive advanced economies in terms of energy costs for businesses, leading businesses to warn they face a structural disadvantage.
A further 34% of SMEs want stronger tax incentives to encourage investment and innovation, while calls for corporate tax cuts have almost doubled year-on-year to 36%, up from 19% in 2024.
Government-backed loans also continue to be high on SMEs’ wish lists, with 26% of businesses looking for better access to affordable finance as they plan to expand.
Confidence that the government will deliver a business-friendly autumn budget remains low at 36%. Many companies say they face the same obstacles that held them back last year: 46% cite a stagnant economy, 39% point to persistently high inflation and 30% point to high interest rates.
With 68% of SMEs saying the autumn budget will have a “significant” or “fundamental” impact on their growth plans, pressure is growing ahead of the announcement on November 26.
Mike Randall, CEO of Simply Asset Finance, said: “It’s incredibly encouraging that SMEs are showing a clear willingness to invest and grow. But there remains frustration at the lack of support with ever-increasing costs and the same obstacles blocking their path forward.”
“Energy costs remain the biggest barrier to growth – and businesses are clear they need support to create more scope to invest. With the UK facing some of the most expensive energy costs in the world, businesses are at a disadvantage and are having to give in.”
“With the Budget weeks away, the government has a critical window of opportunity. The right decisions could boost growth and boost productivity across the UK; the wrong ones threaten to stall momentum at a crucial moment.”
