Sustained and targeted investment is the bedrock of a thriving economy, and for the UK, unlocking a new era of growth, productivity and employment hinges on a concerted effort to boost capital spending.
The last two decades have seen the UK economy weathering a series of shocks – from the global financial crisis, to fiscal austerity, the decision to leave the European Union, the Covid-19 pandemic and rising energy prices following Russia’s invasion of Ukraine.
These shocks have constrained business investment growth, but do not mean the UK is condemned to a low-investment equilibrium. Indeed, investment has still been growing despite recent uncertainty.
In 2024, business investment hit a new record, and in the first half of 2025, it has grown by 3% in comparison to last year¹.
At present, larger companies are driving the UK’s investment growth, and in Q1 2025, the percentage of business investment driven by larger companies reached a high last seen in 2016.² Small and medium-sized enterprises (SMEs) in contrast are lagging behind.³
Now is the moment to accelerate. With the recent launch of the UK’s Modern Industrial Strategy and Plan to support SMEs, there is a fresh opportunity to unlock SME investment and drive the national investment rate upward.⁴,⁵
If UK SMEs were to invest at rates in line with larger companies, Barclays’ analysis suggests that £60 billion of new SME investment could be unleashed per year.⁶,⁷
