Following consecutive periods of steady improvement stretching back to May 2023, confidence among the UK’s SMEs has fallen back, reflecting concerns in a number of sectors. Close Brothers’ tracker – the Business Sentiment Index (BSI) - measures business confidence among the UK’s small business owners.
The decline hasn’t been seen across the board, with some sectors trending upward (Manufacturing and Engineering and Services), while others - including Transport and Haulage, Print and Packaging, Construction and Agriculture – weakened following challenges, ranging from seasonal dips in orders to one of the wettest winters on record, affecting farmers and consumer spending alike.
Research date | BSI score | % change |
Jan-25 | 22.75 | -7.7% |
May-24 | 24.5 | +3.11% |
Jan-24 | 23.75 | +9.2% |
Sep-23 | 21.75 | +8.75% |
May-23 | 20 | +74% |
Dec-22 | 11.5 | -24% |
Jul-22 | 14.25 | -96% |
Feb-22 | 27.9 | -12% |
Sep-21 | 31.75 | +11% |
Apr-21 | 28.63 | +97% |
Nov-20 | 14.5 | +18% |
Jun-20 | 12.25 |
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Impact of the Budget
The fall comes despite 50% of businesses expecting to benefit from the changes announced in the Budget.
Q: Overall, do you think your business will benefit from changes in the recent budget?
• Yes: 49%
• No: 40%
• Don't know: 11%
Views about the Budget’s impact on the economy was equally mixed, with one in five of the view it would have no effect at all.
Q: How does the October budget make you feel about the outlook for the Economy?
- Positive: 35%
- Negative: 39%
- I don't think the budget is going to impact the economy: 20%
- Don't know: 7%
Appetite for investment
Despite recent economic news, firms’ appetite to invest in their business in the coming 12 months improved by 6% to 72% (May 2024: 66%).
This stability was notable across all the sectors and was the most consistent of the four indicators.
Missed opportunities
The number of companies that have missed business opportunities because of a lack of available funding rose, and is at its highest level for over 18 months:
- 45% - January 2025
- 34% - May 2024
- 39% - January 2024
- 41% - September 2023
- 45% - May 2023
- 51% - December 2022
Lack of access to finance has been identified by the Federation of Small Businesses (FSB) as a barrier to economic growth, along with uncertainty among small businesses as to where to get information about types of finance available to them.
A recent report by the Bank of England - based on their survey of 2,885 SMEs - stated: ‘Around three quarters of businesses reported that their investment levels were appropriate over the three years prior to the survey, but a fifth said that they had underinvested. Businesses that underinvested were more likely to have negative perceptions of their access to finance than those that invested appropriately’.
Economic outlook
Overall, small business owners remained – on balance – marginally more positive than negative about the UK’s economic prospects for the coming year. This figure still trails well behind sentiment in November 2021, when 75% of respondents were positive about the economy.
Q: How would you best describe your business's economic outlook for the coming 12 months? (Please select best match):
• Confident that the economy will grow: 47%
• Concerned that the economy will slow down: 42%
• I don't think there will be a significant change in the economy: 11%
Predicted business performance
Reflecting the overall BSI result, predictions about future business performance was relatively static and in line with recent government figures confirming the UK economy had zero growth between July and September.
The majority of firms – 52% - expect to tread water during 2025, anticipating their prospects will remain unchanged. More positively, far more business owners (359 respondents / 40%) are hoping to expand their operations compared to just 7% (65 respondents) who think they will contract in the coming year.
Q: In general, how do you expect your business to perform over the next 12 months?
• Expand: 40%
• Stay the same: 52%
• Contract: 7%
• Close down: 1%
Our view
“Typically, sentiment in the sectors rise and fall together, but this time there’s a real and noticeable disparity, with some trending up and others the opposite way,” said Matt Roper, CEO of Close Brothers’ Commercial business. “Print and Packaging, Construction and Agriculture all dipped fairly significantly in the second half of 2024, but this was not unexpected given the challenges these industries have faced over recent months.
“Yet, that being said, there are some positives; for example, 72% of the firms surveyed will actively seek funding for business investment in 2025, and with our history of lending through the cycle, we remain well positioned to support our customers – old and new.”
Score calculation*
The BSI is based on the views of 907 business owners and senior members of the UK’s business community and calculated from data charting their:
• Appetite for investment in their business in the coming 12 months
• Access to finance and whether they’ve missed a business opportunity through lack of available finance
• Views about the UK’s economic outlook
• Thoughts on their likely performance in the coming 12 months
