Investor sentiment is often shaped by headlines, but behind the economic noise, UK businesses are making bold moves. While national forecasts remain muted and government policy casts a long shadow, firms across the country are quietly shifting into growth mode—fuelled by confidence, strategic funding, and a long-term investment mindset.
The start of 2025 has delivered few of the economic green shoots that many had hoped for. Inflation, although slightly easing to 2.8 per cent, remains sticky, and a modest one per cent growth forecast from the Office for Budget Responsibility has tempered national expectations. On top of this, the looming rise in National Insurance contributions threatens to squeeze employers further, raising concerns about operating costs and business sustainability.
Yet amidst this economic backdrop, a surprising surge of business confidence is emerging. According to a recent survey by Boston Consulting Group (BCG), 83 per cent of UK business leaders remain confident about their company’s prospects over the next 12 months, with 39 per cent declaring themselves ‘very confident’. More than half of the respondents anticipate profit growth—a clear indication that many firms are focusing inward to control their destiny, rather than being dictated to by the broader economy.
This optimism is not without its challenges. A significant proportion of business leaders remain wary of potential tax hikes, and there’s a perceptible disconnect between sentiment on the ground and the wider economic narrative. Still, resilience remains the hallmark of the UK’s private sector. A striking 87 per cent of BCG respondents said they plan to invest in their businesses over the coming year—highlighting a commitment to long-term value creation rather than short-term cost-cutting.
At the heart of this investment drive is a strategic shift in how companies fund growth. New data from UK Finance’s latest Business Finance Review shows that more small and medium-sized enterprises (SMEs) are turning to commercial finance to scale their operations. Gross lending surged by 13 per cent year-on-year to surpass £16 billion in 2024. Of note, there were significant gains in key sectors such as agriculture, real estate, health, and recreation—core drivers of regional economic strength.
The numbers tell a compelling story: nearly 45,000 loans were approved in 2024, representing a 23 per cent year-on-year increase, while overdraft approvals soared by 47 per cent. Beyond traditional lending, businesses are increasingly embracing tailored finance tools—like asset finance, invoice discounting and merchant cash advances—to support their cashflow and enable growth without compromising liquidity.
One of the most significant shifts is where this funding is coming from. Sixty per cent of SME loans now originate outside the mainstream high street banking sector. This rise in alternative lending options reflects both a maturing financial services landscape and the growing willingness of new lenders to step in where traditional banks may hesitate. For businesses with vision and a clear growth strategy, capital is not only available—it’s increasingly competitive.
The message is clear: while macroeconomic headwinds persist, opportunities for business growth remain within reach. UK firms that focus on strategic investment, leverage innovative finance solutions, and remain agile in their operations are well-placed to thrive. The uncertain economy may be a hurdle, but it is far from a barrier. Those who act now stand to not only weather the storm but emerge stronger on the other side.
Duke Capital Limited (LON:DUKE), formerly Duke Royalty Limited, is a Guernsey-based provider of hybrid capital solutions for small and medium-sized enterprises (SME) business owners in the United Kingdom, Europe and North America, combining the features of both equity and debt.
