SMEs hold untapped £60 billion investment potential as Barclays calls for policy support and confidence boost

SMEs hold untapped £60 billion investment potential as Barclays calls for policy support and confidence boost

(IN BRIEF) Barclays’ latest report argues that raising SME investment to the same level as larger firms could unlock an additional £60 billion annually for the UK economy. While overall business investment reached record highs in 2024 and continues to grow in 2025, SMEs lag behind due to lower confidence and reluctance to borrow, despite accounting for over half of UK turnover and 60% of employment. Barclays’ Business Prosperity Index highlights that SMEs plan smaller and slower investment increases compared to larger companies. To close this gap, the bank recommends setting a national investment target to align the UK with G7 averages, fostering confidence through a more stable policy environment, and enhancing government support tools through a centralised “Invest to Grow” hub. Barclays executives Matthew Hammerstein and Abdul Qureshi stressed that even small increases in SME capital spending could transform the economy, and emphasised the bank’s commitment to supporting SMEs with resources and guidance.

(PRESS RELEASE) LONDON, 25-Sep-2025 — /EuropaWire/ — Barclays has published a new report that reveals the scale of untapped investment potential among UK small and medium-sized enterprises (SMEs). The analysis shows that if SMEs invested at the same rate as larger companies, an additional £60 billion could flow into the UK economy every year.

While overall business investment in the UK reached record levels in 2024 and rose by 3% in the first half of 2025, growth has been led by larger firms. SMEs – despite representing 52% of national turnover and 60% of employment – remain far more cautious, investing at significantly lower rates. Barclays warns that even modest improvements in SME capital spending could generate transformative benefits for the wider economy.

Barclays’ Business Prosperity Index for Q2 2025 illustrates the divide: 67% of large companies plan to increase investment in the next year, compared to only 53% of SMEs. Furthermore, the scale of planned investment differs sharply, with large firms intending to raise spending by an average of 10.2% compared with 4.8% among SMEs.

The report identifies three broad motivations behind SME investment: confidence in the wider economy, necessary spending to remain competitive, and strategic “big bets” on expansion. Yet many SMEs remain risk-averse, often prioritising short-term challenges over growth and expressing reluctance to take on new borrowing.

To unlock greater SME investment, Barclays has outlined three key policy recommendations for government:

• Make investment a national priority by setting a target to raise the UK investment rate from 17% of GDP – the lowest in the G7 – to 22% by the end of this Parliament, supported by stronger data collection, particularly from the smallest firms.
• Shift the narrative by making business confidence a policy goal and establishing a more consistent, ambitious vision that reduces SME hesitancy and reframes borrowing as a route to growth.
• Provide practical tools by expanding the new Business Growth Service into an “Invest to Grow” hub, consolidating support and offering new resources tailored to SME investment.

Matthew Hammerstein, CEO of Barclays UK Corporate Bank and Head of the Bank’s Public Policy and Corporate Responsibility function, commented:
“Boosting investment is fundamental to the UK’s long-term growth. Our analysis shows there is a substantial opportunity to unlock more investment from SMEs, which are the backbone of the economy. Even incremental increases in their appetite to invest could have a profound impact on national prosperity.”

Abdul Qureshi, Managing Director of Barclays Business Banking, added:
“SMEs often face greater challenges when it comes to confidence and resources, but their agility and innovative potential mean they also offer outsized rewards. The key is striking the right balance on risk and reward. At Barclays, we are committed to helping SMEs build the confidence and access the tools they need to scale up investment and succeed.”

The findings are based on Barclays’ proprietary data and insights, alongside national statistics from the Office for National Statistics (ONS) and international comparisons from the OECD. The report provides a detailed overview of the current UK investment landscape, identifies barriers to SME investment, and proposes actionable steps to build momentum across the sector.

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SOURCE: Barclays