The majority of small and medium-sized businesses in Britain are looking forward to 2025 with confidence, despite continuing economic uncertainty, recent budget pressures, and global geopolitical concerns.
New survey data from KPMG and Aviva shows an optimistic picture emerging among business owners in the country, who expect increased demand, international expansion and a focus on new products and services to support their growth aspirations.
The KPMG survey, which included 1,500 privately owned companies from sectors including technology, finance, manufacturing and retail, revealed that 92 percent of respondents are optimistic about the coming year. This sentiment was echoed in a separate Aviva survey of nearly 500 small businesses, of which 89 per cent were confident of going ahead in 2025.
KPMG indicated that much optimism is focused on expectations of high demand at home and abroad. Many companies are also planning to launch new offerings and move into new markets, especially in Europe and North America. In the long term, the outlook is equally encouraging, with 85 per cent of Aviva survey respondents expecting to do more business in five years than they do today.
“2024 has been a turbulent year, so it is encouraging to see private companies showing resilience and taking a positive outlook for 2025 and beyond,” said Euan West, head of KPMG’s private enterprise practice in the UK and Europe. However, he warned that the coming year will still bring its challenges.
One key concern is cost pressures: just over a third of businesses in the KPMG survey believe the increases in National Insurance contributions and the national minimum wage announced by Chancellor Rachel Reeves in the October Budget will pressure their profit margins. However, rather than downsizing, most SMEs plan to invest more in technology – especially artificial intelligence – to enhance operational efficiency and counter rising costs.
Surveys indicate that these companies will not focus solely on technology-enabled productivity gains; They are also committed to strengthening their workforce. While some critics fear that hiring may slow in response to rising recruitment costs, many SMEs plan to invest in skills and employee development. However, the talent pool remains a concern: only a third of small businesses strongly agreed that there are enough skilled workers available locally. Specific sectors, including manufacturing, hospitality, entertainment and financial services, remain particularly concerned about the shortage of skilled employees.
Infrastructure improvements are also high on the wish list. Two-thirds of SMEs say they need better local transport options, from electric vehicle charging points to more bike lanes, to make employee commutes easier and support sustainable growth.
David Schofield, Director of Sustainability at Aviva, said: “SMEs are the backbone of the UK economy. Its growth is vital not only to economic stability but also to the prosperity of local communities. These survey results underscore their determination and optimism while also highlighting challenges that can impact their growth.
Despite the headwinds, British SMEs are not standing still. Their plans for internationalisation, new products and investments in people and technology suggest that 2025 could be a brighter year, setting a positive course for the UK’s wider economic fortunes.
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