Beyond the Budget blues: why SMEs are charging ahead anyway

SMEs are planning to hire, invest in technology and explore next markets - in other words, they’re gearing up for growth. 

It’s refreshing to be able to say that - especially after the gloom that set in after the Autumn Statement, when Chancellor Rachel Reeves delivered £40 billion in tax increases. 

When Atradius prepared to survey SMEs in the wake of the Autumn Statement (one that prompted, if you recall, newspaper front pages like “Years of tax pain ahead” and “Nightmare on Downing Street”) there was some fear that businesses would have battened down the hatches. Instead, we discovered something quite different.

Yes, businesses still face many challenges - including the impact of the Budget reforms, and a lacklustre economy. 

But our survey suggests that businesses are adapting to the post-Budget landscape with confidence and strategic investment, rather than retreating into caution. Many companies are focusing on expansion rather than immediate cost-cutting. Hiring, investing in technology, and innovation will be used as levers for growth.

More than three quarters (76%) of firms that we surveyed said they will make hiring decisions driven by opportunities for growth in 2025 - much higher than the 30% of firms that are making decisions based on increased costs from the Labour Budget.

We found 38% of businesses plan to hire new staff this year. A little over half (53%) expect to maintain current workforce levels and only 4% plan staff reductions, defying fears of widespread job losses.

Tech leads the way, riding high on demand for AI, cloud and cybersecurity. Companies in the sector are most likely to recruit in the coming months. The sector fared better than many in the Budget, avoiding changes to the likes of R&D tax credits and only modest Capital Gains Tax (CGT) increases. 

Tech companies are investing and innovating too. It can’t be overstated how essential this is. Innovation is the lifeblood of any economy. To back that up, research from Innovate UK shows that businesses that invested in innovation in 2024 generated average sales growth of 7%, compared to just 2% for non-innovators.

It’s not all positive, of course. Many businesses are still getting to grips with the impact of tough Budget measures - particularly retailers. Just 27% of retailers surveyed expect to hire staff this year. There are also signs of a continued growth malaise for some businesses: a lack of opportunities and hesitance, or inability, to innovate or launch into new markets. 

Even the tech sector, with its particularly strong hiring and investment intentions, faces ongoing concerns about skills shortages, competition for talent, and the overall economic climate.

Meanwhile we still see businesses of all stripes grapple with some seemingly intractable problems - not least late payments. Nearly two-thirds (63%) of businesses are concerned about the impact of failed or late payments. 

The pain inflicted by late payments comes up time and again with businesses we speak to, and all with good reason. It’s something the Labour government promises to change. But until we see real progress here, it's a reminder of the threats businesses face in any environment - even one suffused by optimism for the year ahead. 

To find out more about how UK SMEs are planning for the year ahead, with advice to ensure your business thrives throughout the year, sign up to our webinar (11 March 2025 at 9:30am)