UK SMEs pause investments as Spring Statement looms

As the Spring Statement approaches, small and mid-sized businesses (SMEs) are growing increasingly optimistic about their prospects—yet many are reluctant to commit to major investments until they have greater clarity on economic policy.

According to new research from Bibby Financial Services (BFS), 87% of SME decision-makers plan to invest in their businesses this year, signalling strong confidence in growth opportunities. Two-thirds (66%) expect their sales to rise over the next six months, a notable uptick in sentiment.

But with the Chancellor’s budget announcement set for March 26, nearly half (48%) of SMEs surveyed say they are delaying capital expenditure until after the statement, underscoring the weight that fiscal policy continues to hold over business planning.

“The data shows UK businesses are eager to invest, but many are taking a wait-and-see approach ahead of the Spring Statement,” said Derek Ryan, UK Managing Director at Bibby Financial Services.

“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.”

External Financing Key to Investment Appetite

While investment intentions remain high, the report highlights a divide between businesses that rely on external financing and those that are self-funded.

Among SMEs using external sources of finance, only 6% say they have no plans to invest. However, that figure more than doubles to 14% among self-funded businesses, suggesting that access to financing plays a crucial role in investment confidence.

The disparity extends to bad debt exposure as well. SMEs without external funding wrote off an average of £45,000 in unpaid invoices over the past 12 months—nearly double the £25,000 loss suffered by businesses with financing.

“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,” Ryan added.

“This illustrates the importance of the Chancellor’s plans for reform to make it easier for businesses to trade and raise finance.”

The Chancellor’s Next Move

The latest findings come as the UK government unveils new initiatives aimed at supporting small businesses and boosting global exports. Last week, policymakers announced the formation of a new Board of Trade, which includes a call for evidence on SME access to finance—a move that could influence lending policies in the months ahead.

But for now, many businesses remain in a holding pattern. The impact of previous policy changes, including the Autumn Budget’s rise in employer National Insurance contributions, continues to weigh on investment plans.

More than half (52%) of SMEs say they are less likely to invest in the short term, and the number of businesses with no investment plans at all has risen to 13%, up from 8% in Q3 2024.

With the Spring Statement just days away, the pressure is on the Chancellor to restore confidence and provide stability.

“Findings demonstrate the need for stability in stimulating investment among small businesses to drive economic growth,” Ryan said.

“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.”