A recent survey reveals a prevailing sense of optimism among small and medium-sized enterprises (SMEs) in Britain, with many looking forward to the prospects of 2025 amid ongoing economic challenges. The collaborative survey conducted by KPMG and Aviva highlights a sentiment of resilience, despite notable budget pressures and global geopolitical uncertainties.
In a comprehensive survey involving 1,500 privately owned companies across diverse sectors such as technology, finance, manufacturing, and retail, KPMG found that 92 per cent of respondents hold a positive outlook for the upcoming year. This confidence aligns with findings from a separate Aviva survey of nearly 500 small businesses, where 89 per cent of participants expressed optimism for 2025.
The optimism is largely founded on expectations of increased demand both domestically and internationally. Many SMEs are also gearing up to introduce new products and services while eyeing expansions into new markets, particularly in regions like Europe and North America. Moreover, a longer-term perspective shows even greater eagerness, with 85 per cent of Aviva survey respondents anticipating more business activity in five years than currently realised.
“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,” remarked Euan West, head of KPMG’s private enterprise practice in the UK and Europe. He did, however, temper enthusiasm by noting that the upcoming year will still present challenges.
Among these challenges, operational cost pressures loom large. Just over a third of businesses surveyed by KPMG expressed concern that the increases in National Insurance contributions and the national minimum wage, as announced by Chancellor Rachel Reeves in the recent October Budget, may squeeze profit margins. Despite these pressures, a significant number of SMEs are choosing to invest in technology—particularly artificial intelligence—as a strategy to enhance operational efficiency and mitigate heightened costs.
Furthermore, the commitment to workforce development remains strong, even in the face of rising recruitment costs. Many SMEs still plan to prioritise skills enhancement and employee development. Nonetheless, the availability of skilled workers poses a notable concern; only a third of small businesses indicated they strongly believe there are sufficient skilled employees available in their localities. Notably, sectors such as manufacturing, hospitality, entertainment, and financial services are particularly apprehensive about talent shortages.
Infrastructure improvements are also seen as essential by many SMEs. Two-thirds of the businesses surveyed reported a need for better local transport systems, encompassing features such as electric vehicle charging points and enhanced bike lanes, to facilitate employee commutes and promote sustainable growth.
David Schofield, Director of Sustainability at Aviva, commented, “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.” He underscored that while survey results reflect the determination and optimism of SMEs, they also highlight the challenges that could hinder growth.
In summary, despite economic uncertainties ahead, British SMEs are showing proactive tendencies. Their intentions to pursue international ventures, develop new products, and invest in both technology and their workforce suggest that they are laying the groundwork for a potentially prosperous 2025, which could positively impact the broader economic landscape of the UK.
Source: Noah Wire Services