Supporting SMEs’ resilience and growth

The UK economy entered 2026 in a fragile position, with the outlook for this year offering little cause for optimism. As SMEs once again face challenge and uncertainty, our focus remains on supporting them and playing an active role in strengthening their resilience and growth.

In February, the Office for National Statistics reported growth of just 0.1 percent in the final three months of 2025 and the forecast ahead is not much better. Consumer spending is expected to remain flat. Global growth is expected to slow, owing to a combination of rising costs and tariff friction.

The evolving situation in the Middle East is expected to worsen this outlook as we face into energy price shocks and supply chain risk.

Against this backdrop, our latest ‘temperature check’ of SME sentiment* reflects a more cautious outlook. Weaker growth, elevated costs and ongoing cashflow pressures continue to shape decision making. After several quarters of gradually improving sentiment amongst business owners - peaking at 66 percent in Q3 2025 - confidence has weakened sharply, falling to 51 percent.