Barclays highlights £60bn SME investment opportunity

The UK economy could gain an additional £60 billion per year if small and medium-sized enterprises (SMEs) increased their investment levels to match those of larger firms, according to new analysis published by Barclays.

The report – Unlocking Small and Medium-sized Enterprise Investment: Building a growth mindset in the UK – highlights that while UK business investment reached record highs in 2024 and grew 3% year-on-year in the first half of 2025, the bulk of this growth has been driven by larger companies. SMEs, despite accounting for 52% of national turnover and 60% of employment, continue to lag behind in both confidence and capital spending.

Barclays’ Business Prosperity Index shows that 53% of SMEs intend to increase investment over the next 12 months, compared with 67% of larger firms. The scale of planned increases also differs: SMEs forecast a 4.8% rise in investment, while large firms expect to boost spending by more than double that, at 10.2%.

The report identifies three main drivers of SME investment: foundational confidence in the economy, necessary spending to remain competitive, and expansion-focused “big bet” investments. However, many SMEs remain cautious amid economic uncertainty and often prioritise short-term challenges over growth, with reluctance to take on borrowing a persistent barrier.

To unlock the £60 billion opportunity, Barclays has set out three key recommendations for government policymakers:

Make investment a whole-economy effort by raising the UK’s national investment rate from 17% of GDP — the lowest in the G7 — to 22% by the end of this Parliament, supported by improved SME-level investment data.
Shift the narrative on SME investment by tackling low confidence and creating a stable, ambitious policy environment that reduces the perception of borrowing risk.
Provide practical tools to support SMEs, including expanding the government’s new digital Business Growth Service to create an “Invest to Grow” hub consolidating resources and support.

Matthew Hammerstein, CEO of Barclays UK Corporate Bank, said: “Boosting investment is core to driving growth in the UK.

“SMEs are the backbone of the UK economy, representing 60% of employment and over half of private sector turnover. Even small improvements in SMEs’ appetite to invest could have transformational impacts for the UK economy.”

Abdul Qureshi, Managing Director of Barclays Business Banking, added: “This report highlights the untapped potential for growth within the SME sector.

“While SMEs often face higher perceived risks due to their size and resource constraints, they also offer outsized rewards in terms of innovation, agility, and regional economic impact. Striking the right balance on risk-reward is key to driving sustainable growth across the UK.”

Drawing on data from the Office for National Statistics (ONS), the OECD, and Barclays’ own research, the report calls for coordinated action to boost SME investment and confidence. Barclays argues that even modest increases in SME spending could generate significant returns for the economy, particularly given the sector’s central role in employment and productivity.