The easing of inflation in 2024 has provided a long-awaited reprieve for UK businesses, but the challenges are far from over. With rising taxes, wage pressures, and global market disruptions, companies face a new wave of hurdles. Recent insights shed light on how small businesses are adapting and how financial institutions are stepping up to meet evolving needs.
As businesses grapple with persistent challenges like soaring energy costs and supply chain disruptions, resilience has become a cornerstone for survival and growth. Our latest research indicates that while 74% of businesses remain concerned about energy costs and 66% about supply chain issues, optimism is gaining ground. A notable 59% of small businesses are more positive about the economy than last year, and 63% expect their profitability to match or exceed previous levels.
This growing confidence is mirrored in a transformative shift in the use of credit. Where short-term needs dominated in 2023, 2024 has seen a pivot toward funding expansion. Companies are moving beyond survival tactics, actively pursuing growth opportunities through diversification, employee upskilling, and improved operational flexibility. This proactive mindset is driving demand for commercial lending, particularly in service industries.
Lenders are responding with equal dynamism, balancing increased demand with prudent safeguards. Enhanced affordability reviews are becoming standard practice, fostering a safer lending environment that SMEs appreciate for its long-term benefits. This cautious optimism is reflected in the alignment between lenders and SMEs on the importance of robust customer data for informed decision-making.
The path from surviving to thriving is well underway, with resilience and strategic lending as twin pillars of success. As businesses and lenders deepen collaboration, the focus will increasingly shift toward capitalizing on growth opportunities while ensuring stability. Together, these partnerships are charting a course for sustainable economic progress.
UK businesses are transforming challenges into opportunities by focusing on resilience and growth. By diversifying operations, investing in talent, and forging stronger lender partnerships, they are moving from survival mode to a thriving future.
Duke Capital Limited (LON:DUKE), formerly Duke Royalty Limited, is a Guernsey-based provider of hybrid capital solutions for small and medium-sized enterprises (SME) business owners in the United Kingdom, Europe and North America, combining the features of both equity and debt.
