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

According to new research from independent funder Bibby Financial Services (BFS), SMEs remain ambitious for growth, with 87% planning to invest this year. The Q1 2025 SME Confidence Tracker, which surveyed 1,000 UK SMEs, reveals growing optimism, with two-thirds (66%) expecting sales to rise over the next six months.

However, the uncertainty surrounding the Spring Statement on 26 March is leading to hesitation. The research found that 48% of SMEs are delaying major investment decisions until after the Chancellor’s speech, while 63% say they would feel more confident to invest in a lower interest rate environment.

Derek Ryan (pictured), UK managing director at Bibby Financial Services, said: “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. More than half (52%) of SMEs said they are now less likely to invest in the short term due to the measures announced in the Autumn Budget, citing rising employer National Insurance contributions as a key factor. The number of businesses with no investment plans at all has increased to 13%, up from 8% in Q3 2024.

The research also highlights that businesses using external sources of finance are more likely to invest. While just 6% of those using external finance have no plans to invest, the figure more than doubles to 14% for businesses that are self-funded. Those without external finance also experience greater losses due to bad debt, with businesses that have written off debt in the past 12 months losing an average of £45,000, compared with £25,000 for businesses using external finance.

Ryan added: “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.”