Post-budget survey reveals SME growth confidence despite challenges
We surveyed 2,000 small and medium-sized enterprises (SMEs) across the UK to gauge their perspectives on a range of important topics following the Chancellor’s Budget in October. This broad sample included sole traders and medium-sized businesses (those employing 50–249 people) across a range of sectors, offering valuable insights into market sentiment and the challenges and opportunities SMEs anticipate.
Business leaders from across the UK gave their views on a wide range of issues, including; outlook around growth, reaction to the Autumn budget, attitudes to investment and perceptions around business lenders.
The findings reveal an encouraging 81% of SMEs are optimistic about their business prospects. However, concerns remain regarding the Budget’s potential impact, particularly the proposed changes to Capital Gains Tax (CGT) and National Insurance Contributions (NICs).
Read the full report on exploring SME outlook, sentiment and funding options here.
Key findings
Almost half (49%) of SMEs believe the government is fostering an environment conducive to business growth, while over half fear the NIC changes will negatively affect their business.
42% of SMEs have adjusted their approach to selling their business due to tax reforms.
Funding is a priority, with 41% of medium-sized businesses planning to seek growth capital in the coming year.
SME positivity amidst uncertainty
Confidence in future growth prospects is high overall, with 81% of SMEs optimistic about their business prospects in the coming year. However, the level of confidence varies significantly by size with 86% of medium-sized businesses confident about growth, compared with 70% of small businesses and only 64% of sole traders.
The survey identified general economic conditions (37%) and inflation (37%) as the main threats to this positive outlook, with rising costs and delayed decision-making affecting margins and stalling growth. Other significant challenges included competition (29%), energy costs (26%), and staffing expenses (23%).
Barriers to SME growth
Base: Greatest challenges n=2033, Single greatest challenge currently n=2007
Medium-sized companies report facing particular hurdles to growth, with 26% of medium-sized firms highlighting skill shortages and recruitment challenges as a significant concern versus only 18% of smaller businesses.
Economic pressures, including rising input costs, remain a shared concern across all business sizes.
Mixed reaction to Government policy
The Labour Government's Budget received mixed feedback from SMEs, with only 49% feeling it supports business growth. The proposed increase in NICs drew particular criticism, with 53% fearing a negative impact, especially for lower-wage sectors such as hospitality and care homes.
According to the survey, SMEs plan to adapt to these policy shifts in several ways:
37% intend to raise customer prices.
31% anticipate slower salary growth.
25% plan to reduce recruitment efforts.
Medium-sized businesses, however, are focusing on innovation to mitigate rising costs, with 26% investing in automation and technology.
Funding opportunities and obstacles
Access to funding remains crucial, with 56% of respondents already securing external debt financing and 34% obtaining growth capital. Medium-sized businesses are driving demand, with 41% planning to pursue additional growth capital in the coming year.
Medium-sized businesses most like to seek more funding in the next year
2 in 5 medium-sized businesses will seek further funding for growth capital 
*Asked to those who have secured external funding in the past
Although traditional high-street banks remain the most popular funding source (31%), alternative lenders are gaining traction. Notably, 69% of SME decision-makers are now more likely to consider alternative financing options, a figure that rises to 73% among younger entrepreneurs.
Despite these trends, barriers to accessing finance persist, with the cost of borrowing and limited funding options at the top the list of concerns for SMEs that have previously sought financing.
Impact on business sales and M&A activity
Economic uncertainty and policy changes, particularly recent changes to CGT and Business Asset Disposal Relief, are driving businesses to reassess their long-term strategies.
According to the survey:
42% of SMEs have adjusted their approach to selling their business in response to tax reforms.
27% of business owners are considering selling earlier, potentially reshaping the market for mergers and acquisitions (M&A).
The survey results underscore the resilience of UK SMEs, reflecting their optimism about future growth despite notable challenges. Rising costs, economic pressures, and recruitment issues are driving innovation, particularly among medium-sized enterprises, many of which are embracing automation and alternative funding sources. However, smaller businesses and sole traders may struggle to adapt at the same pace, emphasising the need for targeted support.
