Most of Britain’s small and medium-sized enterprises (SMEs) are looking forward to 2025 with confidence, despite ongoing economic uncertainty, recent budget pressures, and global concerns.
New survey data from KPMG and Aviva shows an optimistic picture emerging among the country’s business owners, who expect increased demand, international expansion, and a focus on new products and services to support their growth ambitions.
A KPMG survey of 1,500 private companies from sectors including technology, finance, manufacturing, and retail revealed that 92 percent of respondents are excited about the year ahead. This view was echoed by a separate Aviva survey of around 500 small businesses, where 89 per cent were confident they would be in business by 2025.
KPMG noted that most of the optimism is centered on the expectation of growing demand at home and abroad. Many companies plan to launch new offerings and expand into new markets, especially in Europe and North America. Long-term, the outlook is equally encouraging, with 85 percent of Aviva respondents expecting to do more business in five years than today.
“2024 has been turbulent, so it’s encouraging to see the private sector showing resilience and setting a positive outlook for 2025 and beyond,” said Euan West, KPMG’s UK and Europe head of private sector. However, he warned that next year will still bring its challenges.
The main concern is cost pressure: just over a third of companies in a KPMG survey believe that the increase in national insurance contributions and the minimum wage announced by Chancellor Rachel Reeves in the October budget will pressure their profit margins. But instead of procrastinating, most SMEs are planning to invest heavily in technology—especially artificial intelligence—to improve efficiency and increase costs.
Research shows that these businesses will not only focus on technology-enabled productivity gains; they are also committed to strengthening their employees. While some critics fear hiring may be slow to respond to higher employment costs, many SMEs are planning to invest in skills and staff development. Yet the talent pool remains a concern: only a third of small businesses strongly agree that there are enough skilled workers available locally. Certain sectors, including manufacturing, tourism and entertainment, and financial services, remain particularly concerned about the shortage of skilled workers.
Infrastructure development is also high on the wish list. Two-thirds of SMEs say they need better local transport options, from electric car charging points to more bike lanes, to facilitate staff mobility and support sustainable growth.
David Schofield, director of sustainability at Aviva, said: “SMEs are the backbone of the UK economy. Its growth is not only important for economic stability but also for the prosperity of local communities. The findings of the survey emphasize their determination and hope while also highlighting the challenges that can impact their growth.”
Despite the storms, Britain’s SMEs are not standing still. Their plans for internationalization, new products, and investment in people and technology suggest that 2025 could be a bright year, setting a good trajectory for the UK’s wider economic fortunes.
