New research from global payments provider Elavon indicates that UK small-to-medium enterprises (SMEs) remain resilient despite economic challenges.
The survey, conducted in February ahead of the Spring Budget, found that 54% of businesses are optimistic about the UK’s economic outlook over the next 12 months, while 82% are confident in their ability to grow during this period.
Businesses are focusing on investment to support their growth strategies, with 58% planning to upgrade technology, 47% prioritising customer experience and 42% looking to establish new partnerships. The research highlights that confidence levels vary significantly by sector, influenced by factors such as consumer spending habits, supply chain disruptions and market volatility.
Optimism is highest in the automotive (76%) and leisure (68%) industries, while healthcare (40%) and retail (27%) report lower confidence. When asked about industry-specific growth expectations over the next year, 80% of automotive businesses expressed optimism compared to 45% in retail.
Policy Support a Key Priority for Businesses
With the Spring Statement approaching, businesses are looking to the government for policies that foster growth. Across sectors, 56% of SMBs seek greater support for small businesses, while 43% prioritise tax and rate cuts. Investment in technology is also a key area, with 40% of businesses calling for measures to support innovation.
Sector-specific priorities vary. In hospitality, 69% of businesses want stronger small business support, whereas 54% of leisure businesses prioritise investment in technology. In retail, 62% see small business support as the most important issue, reflecting ongoing economic pressures in the sector.
Hemlata Narasimhan, President of Europe at Elavon, stated that while sentiment among SMEs remains positive, businesses are looking for additional support to navigate economic headwinds. She noted that SMEs are making strategic investments to build resilience, but external policy decisions will play a significant role in shaping their future.
Late Payments and Security Risks Remain Key Concerns
Late payments, fraud and security risks are among the top challenges facing SMEs. The survey found that 30% of businesses consider late payments a primary concern, with 45% reporting an increase in delayed payments over the past six months. Security and fraud were identified as the most pressing payment-related issues by 40% of businesses. Additionally, 34% expressed concerns about keeping up with payment innovation, while 33% cited chargebacks as a key challenge.
To address these risks, many businesses are investing in alternative payment methods. Over the past year, 50% have adopted contactless payments via digital wallets, 40% have introduced contactless card payments and 34% have sought more innovative payment providers to improve cash flow.
Narasimhan emphasised that businesses hesitant to adopt new technologies may struggle to compete in an evolving marketplace. She highlighted the role of payments modernisation in streamlining operations, improving customer experience and opening new revenue streams.
