UK businesses hit the pause button: But 8 in 10 are ready to invest if the Budget delivers
The latest Q3 Barclays Business Prosperity Index reveals:
- Anonymised data from Barclays shows a picture of cautious activity in Q3, particularly among small and medium-sized businesses (SMEs) who are building savings buffers
- This caution is reflected in plans for growth and expansion, with over half of businesses delaying investment decisions until after the Autumn Budget
- Economic uncertainty is now the biggest challenge cited by business leaders
- However, if the Budget includes supportive measures, eight in 10 businesses are likely to increase investment, with the vast majority confident in their own business prosperity
- Six months on from ‘Liberation Day’, eight in 10 business leaders remain concerned about tariffs and global trade uncertainty
Heightened hesitance and careful cash management for SMEs ahead of the Budget
Barclays’ anonymised client data indicates a cautious landscape of business activity in Q3 ahead of the Autumn Budget:
- UK business cash inflows fell 1.9 % year-on-year in Q3 (a 1.6 percentage point improvement on Q2), while outflows dropped 3.1% year-on-year, amidst disciplined spend control
- SMEs built precautionary savings buffers, with savings growing at a greater rate than large corporates, up 6.1 % year-on-year
- Lending activity showed signs of recovery, with loan balances up 2.2 % and loan volumes rising 4.1 % year-on-year, largely driven by larger corporates, whilst SMEs remained tentative to borrow to invest
The Barclays Business Prosperity Index, which includes a survey of 1,000 UK business leaders, also confirmed businesses are taking a more cautious approach to investment until after the upcoming Autumn Budget. Over half (55 %) reported that their plans are on hold, while almost a third (31 %) called for greater policy stability from the chancellor to unlock private sector investment.
Other key asks of government include support with reducing operating costs (36 %), improving access to finance (35 %), and increasing access to skilled labour (29 %).
Business confidence remains stable despite economic and political uncertainty
Economic uncertainty is now the biggest challenge cited by business leaders (36 %), recording a 7 percentage point increase year-on-year.
However, business sentiment towards the UK political environment is divided between SMEs and larger corporates. Over four in 10 (45 %) small businesses (1-49 employees) reported the level of certainty over future policy is having a negative impact on them, while 58 % of larger businesses (250+ employees) said the opposite, claiming a positive effect.
Despite uncertainty in the external environment, leaders remain confident about the future of their own businesses. The vast majority (86 %) of survey respondents feel confident about their prosperity over the next 12 months, with a 10 point lead for large firms (91 %) compared to small businesses (81 %). Across all business sizes, 85 % and 83 % of leaders are confident over the next three and five years.
| Confidence in Future Business Prosperity by Company Size | ||||
| Micro (1-9 employees) | Small (10-49 employees) | Medium (50-249 employees) | Large (250+ employees) | |
| Next 12 months | 73% | 88% | 91% | 91% |
| Next 3 years | 72% | 85% | 90% | 90% |
| Next 5 years | 70% | 80% | 84% | 90% |
Company leaders gear up for post-Budget investment if policies align
All eyes remain on the Budget, as business leaders suggest policy certainty could unlock investment, with 83 % intending to increase investment if the chancellor introduces supportive measures such as reducing operating costs, improving access to skilled labour and providing policy stability.
Encouragingly, seven in 10 (72 %) believe that the Budget will contribute to improving productivity in the UK economy.
In September, a Barclays report revealed a £60bn opportunity for the UK economy if small and medium-sized enterprises (SMEs) were to invest at rates in line with larger companies, and called for the government to target a national investment rate of 22 % of GDP by the end of the Parliament, up from 17 % in 2024.
Abdul Qureshi, managing director of Barclays Business Banking said: “In what has been a challenging year for UK business, it is of vital importance to build up confidence to invest and grow, particularly within the SME sector.
“It is interesting to see that seven in 10 leaders believe having a national investment target will boost business investment, and we look forward to hearing the chancellor’s approach to supporting UK business and wider productivity to drive growth in the upcoming Budget.”
US tariff uncertainty shifts global trade and encourages domestic investment
Six months after Liberation Day, 79 % of businesses remain concerned about trade and tariff uncertainty, which remains level since businesses were last polled by Barclays in May.
For many, trade policy has become a determining factor in their strategy, with over three-quarters (77 %) revealing that uncertainty has influenced where their business is choosing to invest.
The effects have been felt most acutely in global supply chains, with rising costs for goods and materials the most cited challenge since Liberation Day, affecting almost three in 10 (28 %) businesses.
In response, 62 % of businesses have scaled back their operations, investment, or supply chain in the US since tariffs were announced. Instead, companies are turning towards Europe, which leaders say has seen the biggest increase in international trade since Liberation Day. Almost half of businesses (51 %) plan to prioritise these markets over the next 12 months.
However, amid the global disruption, there have been some positive outcomes for the UK economy, with almost a quarter of businesses (23 %) reporting that the new environment has improved the competitiveness of UK-made products. An additional 30 % of businesses are increasing their investment in the domestic market as a result.
Anonymous client data from Barclays revealed a similar picture, with inbound international payments declining -3.5 % year-on-year, although the slowdown eased versus Q2, suggesting early stabilisation in cross-border activity.
Matt Hammerstein, CEO of Barclays UK Corporate Bank said: “There are positive signs ahead of the Budget – businesses pledge to increase investment if fiscal policies align with their ambitions, particularly on productivity. This is a defining moment to provide policy stability that builds confidence among the business community.
“Our data suggests UK businesses may be adapting to the new world order on tariffs. Continued flexibility will build confidence in the UK as an international trading nation, despite uncertain global headwinds.”
Barclays anonymised client data:
| Metric | Q3 2025 compared to Q3 2024 (year-on-year) | Q3 2025 compared to Q2 2025 (change in year-on-year growth rates) |
| Cash inflows | -1.9% | +1.6 percentage points |
| Cash outflows | -3.1% | -0.4 percentage points |
| Savings balances | +0.5% | +1.2 percentage points |
| Lending value | +2.2% | +1.7 percentage points |
| Lending volume | +4.1% | +2.2 percentage points |
| Trade via international payments | -3.5% | +0.6 percentage points |
Data used from anonymised client data from over 1 million UK businesses across Barclays UK Corporate Bank and Business Banking divisions.