British small businesses are reluctant to invest due to the lack of confidence in the economy and the fears of more tax increases, leaving billions of pounds of without exploiting spending potential, said Barclays.
If small and medium enterprises (SME) invested the same rates as the largest companies, around 60 billion new investments could be unlocked per year in the United Kingdom economy, according to bank estimates.
Business investment refers to expense in assets such as buildings, machinery and intellectual property.
The bank giant used its own customer data, which cover around one million SME and a quarter of the United Kingdom companies, and official and governmental investment figures for analysis.
The smallest companies have the appetite of investing in growth, but they are reluctant to do so due to low levels of trust, according to the report.
This derives from the concerns about the economic climate, their ability to pay the debts of the lenders and the direction of government policy measures.
Barclays said that the increase in commercial costs resulting from the fall budget last year had a significant effect on SME business confidence in 2025.
Between the third quarter of 2024 and the second quarter of 2025, the proportion of SME that felt positive about the current climate decreased from 48% to 36%, while economic uncertainty increased sharply, the bank said.
He suggested that companies need peace of mind that “the government does not intend to further increase commercial taxes, national insurance contributions or commercial rates,” emphasizing the need for “consistent policy management.”
The Government should make it a deliberate priority to boost business confidence, even establishing it as a specific policy objective and changing the perceptions to be borrowed to invest entails excessive risk, Barclays said.
Matt Hammerstein, executive director of the Barclays Corporate Bank, said: “Short -term economic shocks such as the increase in energy prices and the broader inflationary pressure make it much more challenging than smaller companies plan their future growth.”
He said SMEs throughout the United Kingdom have “great potential to invest and grow”, but they need their trusted trust to do so, which will come from “greater long -term policy certainty.”
“Even small improvements in the appetite of investing from SMEs could have transformative impacts for the economy of the United Kingdom,” he added.
