Market Update: We break down the business implications, market impact, and expert insights related to Market Update: Barclays report highlights opportunity for £60 billion boost per year to UK economy through increased investment by SMEs – Full Analysis.
In a new report published today, Barclays’ analysis shows that – if UK small and medium-sized enterprises (SMEs) were to invest at rates in line with larger companies – £60 billion of new investment could be unleashed per year into the UK economy.1,2
In 2024, UK business investment reached a record level, and in the first half of 2025, business investment grew 3% year-on-year.3 At present though, larger companies are driving investment in the UK, while SMEs lag behind in both confidence and capital spending.4 Yet, SMEs represent 52% of national turnover and 60% of employment, meaning that even incremental increases in average investment rates by SMEs could have a sizeable economic impacts for the UK overall.5
According to Barclays Business Prosperity Index data for Q2 2025, 53% of SMEs intend to increase investment in the next 12 months, compared to 67% of large companies over the same period. The expected amounts of investment also differ significantly, with SMEs on average planning to increase investment by 4.8%, and large companies by 10.2%.6
Barclays identifies three key drivers of SME investment in the UK: foundational factors such as overall confidence in the economy; necessary investments to stay competitive amid rising costs; and ‘big bet’ investments for expansion.7 However, many SMEs are cautious due to economic uncertainty, prioritising immediate challenges over growth, and can be reluctant to borrow.
In the report, Barclays outlines three policy recommendations for the UK Government that would support in building SME confidence to invest, including:
- Making investment a whole-economy effort: Setting a target to increase the national investment rate from 17% of GDP in 2024 – the lowest of all G7 nations – to 22% by the end of this Parliament, and aligning the UK with the G7 average.8 Underpinning this with improved data collection on business investment, especially for the smallest SMEs, is essential.
- Shifting the narrative on SME investment: Barclays identifies low confidence, stemming from economic and policy uncertainty, as a major barrier to SME investment. The government is urged to set business confidence as a policy goal and create a stable, ambitious narrative that counters hesitation to invest and the perception that borrowing to invest comes with excessive risk.
- Practical tools to support SME investment: The government’s new digital Business Growth Service, a centralised portal for SME support, should be expanded and include an “Invest to Grow” hub that consolidates resources and offers new, practical tools to promote investment and build confidence among UK SMEs.
Matthew Hammerstein, CEO of Barclays UK Corporate Bank and Head of the Bank’s Public Policy and Corporate Responsibility function said:
“Boosting investment is core to driving growth in the UK. The government’s recent Industrial Strategy and Plan to support SMEs, along with data showing that larger businesses are increasing investment, are positive steps in the right direction. Yet, Barclays analysis indicates there is a substantial opportunity to boost SME investment further. SMEs are the backbone of the UK economy, representing 60% of employment and over half of private sector turnover. Even small improvements in SMEs’ appetite to invest could have transformational impacts for the UK economy.”
Abdul Qureshi, Managing Director of Barclays Business Banking, which serves UK businesses with an annual turnover under £6.5m said:
“This report highlights the untapped potential for growth within the SME sector. While SMEs often face higher perceived risks due to their size and resource constraints, they also offer outsized rewards in terms of innovation, agility, and regional economic impact. Striking the right balance on risk-reward is key to driving sustainable growth across the UK. At Barclays UK, we are committed to supporting SMEs in their investment journey, ensuring they have the resources and confidence to thrive in today’s competitive market.”
The report draws on Barclays’ extensive data and insights, as well as national investment data from the Office for National Statistics (ONS) and the Organisation for Economic Co-operation and Development (OECD). It provides a detailed analysis of the current investment landscape, identifies key barriers to SME investment, and offers actionable public policy recommendations to support SMEs in their investment journey. Click here to view the full report and methodology.
Notes to Editors:
1) The full methodology underpinning the calculation can be found in the data annex of the main report on Page 33[PG1] . For the purposes of the analysis in this paper, SMEs refers to companies with fewer than 250 employees, while large companies are those with 250 and above.
2) This exercise aims to estimate the level of SME investment that could be realised if these firms were to invest at the same rate as larger companies. While it is recognised that barriers may prevent SMEs from investing at such rates in reality, this analysis aims to highlight the scale of the opportunity that could be realised if SME investment intentions were to improve and barriers were to be broken down.
3) Office for National Statistics, Business investment in the UK: April to June 2025 provisional results, August 2025.
4) Barclays analysis based on Quarterly Acquisitions and Disposals of Capital Assets Survey (QCAS), Office for National Statistics, June 2025.
5) GOV.UK, Business population estimates for the UK and regions 2024: statistical release, October 2024.
6) Barclays Business Prosperity Index Survey, Q2 2025
7) Barclays, Business Attitudes to Investing, January 2025.
8) OECD, Investment (GFCF).
Barclays’ Group Policy Development team creates public policy thought leadership content on behalf of Barclays. Our work draws on the bank’s expertise, data and insights, and is intended to inform the design and application of public policy solutions in response to pressing economic and societal challenges.
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