Barclays has released a new report indicating that if small and medium-sized enterprises (SMEs) in the UK increased their investment rates to match those of larger companies, it could generate an additional £60 billion per year for the UK economy. The analysis is based on recent data from Barclays as well as national statistics.
In 2024, business investment in the UK reached record levels, with a 3% year-on-year increase during the first half of 2025. However, most of this growth was driven by larger companies. SMEs, which account for 52% of national turnover and 60% of employment, have not matched this pace in terms of confidence or capital spending.
According to Barclays’ Business Prosperity Index for the second quarter of 2025, just over half (53%) of SMEs plan to increase investment in the next year. In contrast, 67% of large companies intend to do so. The scale also differs: SMEs expect to boost investment by an average of 4.8%, while large firms anticipate a rise of 10.2%.
Barclays identifies three main drivers behind SME investment: general economic confidence; necessary spending to remain competitive amid rising costs; and major investments aimed at expansion. Many SMEs remain cautious due to ongoing economic uncertainty and are hesitant to borrow money.
The report offers three policy recommendations for the UK Government:
- Set a target to raise the national investment rate from its current level—17% of GDP in 2024—to 22% by the end of this Parliament, bringing it closer to the G7 average.
- Make business confidence a policy goal and promote a stable narrative that encourages SME investment.
- Expand the government’s digital Business Growth Service portal with an “Invest to Grow” hub offering practical tools and resources for SMEs.
Matthew Hammerstein, CEO of Barclays UK Corporate Bank and Head of Public Policy and Corporate Responsibility at Barclays, stated: “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 at Barclays Business Banking—which serves businesses with annual turnovers under £6.5 million—added: "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 findings draw on data from both Barclays' own research as well as sources such as the Office for National Statistics (ONS) and Organisation for Economic Co-operation and Development (OECD). The full report provides detailed analysis on barriers facing SME investors along with policy suggestions intended to foster greater business confidence among smaller firms.
For more information about Barclays or access to its reports visit https://home.barclays/.